U.S. Court of Appeals for the Fifth Circuit, Conti 11. Container Schiffarts-GMBH & Co. KG M.S., MSC Flaminia v. MSC Mediterranean Shipping Company S.A., Docket No. 22-30808

Insurance Law

 

Arbitration Award

 

International Maritime Dangerous Goods Code

 

Confirmation of the Arbitration Award in the Federal District Court

 

Personal Jurisdiction

 

Specific Personal Jurisdiction

 

Purposeful Availment

 

Waiver of Personal Jurisdiction Defense Through Insurer’s Issuance of a Letter of Understanding (or Undertaking)?

 

Louisiana Law

 

 

 

 

 

Appeal from the United States District Court for the Eastern District of Louisiana USDC No. 2:22-CV-1114.

 

 

Conti chartered its cargo vessel, the M/V FLAMINIA, to the Mediterranean Shipping Company (“MSC”). During one voyage, the FLAMINIA received three chemical tanks from the Port of New Orleans. The tanks exploded during Atlantic transit, causing extensive damage and three deaths. After a London arbitration panel awarded Conti $200 million, Conti sued to confirm the award in the Eastern District of Louisiana. The district court, ruling it had personal jurisdiction over MSC because the tanks had been loaded in New Orleans, confirmed the award. MSC appealed, arguing the court lacked personal jurisdiction. While agreeing with much of the district court’s well-stated decision, we must reverse because we conclude the court lacked personal jurisdiction over MSC. We agree with the district court that, when assessing personal jurisdiction to confirm an award under the New York Convention, a court should consider contacts related to the underlying dispute—not only contacts related to the arbitration itself. That holding aligns us with every other circuit to have considered the issue. But we disagree with the district court that MSC waived its personal jurisdiction defense through its insurer’s issuance of a letter of understanding that was expressly conditioned on MSC’s reserving all litigation defenses. We also disagree that the sole forum contact, the loading of the tanks in New Orleans, conferred specific personal jurisdiction over MSC. That contact arose from the unilateral activities of other parties whose actions are not attributable to MSC.

 

 

Accordingly, we REVERSE and REMAND with instructions to dismiss the case for lack of personal jurisdiction.

 

 

Conti, a German corporation based in Hamburg, owns the FLAMINIA. In November 2000, Conti chartered the FLAMINIA to MSC, a Swiss corporation based in Geneva. The charterparty required all disputes arising out of the agreement to be arbitrated in London. For the next 12 years, the FLAMINIA carried thousands of cargo containers to and from ports around the world, including the Port of New Orleans.

 

 

Conti brought an arbitration proceeding against MSC in London as required by the charterparty. The arbitration panel ruled that MSC breached the charterparty by failing to comply with the International Maritime Dangerous Goods Code. It awarded Conti about $200 million in total damages. Conti then sued MSC in the Eastern District of Louisiana seeking to confirm the award pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”). See 9 U.S.C. §207. MSC moved to dismiss for lack of personal jurisdiction.

 

 

(…) While that motion was pending, MSC’s insurer issued a letter of undertaking (“LOU”) to Conti. The LOU promised to pay Conti up to $220 million on any final judgment entered by the Eastern District of Louisiana, provided that Conti did not interfere with MSC’s property or bring a separate action in another jurisdiction. The LOU was “given without prejudice to any and all rights or defenses MSC, its agents or affiliates have or may have” in the Eastern District of Louisiana proceedings. It also permitted Conti to return the LOU if Conti decided to discontinue those proceedings or if the court concluded Conti was not entitled to enforce the award in full.

 

 

(…) The court (…) granted Conti’s motion for judgment on the pleadings and confirmed the arbitral award. MSC now appeals, arguing the court lacked personal jurisdiction over it.

 

 

To confirm the arbitral award, the district court needed personal jurisdiction over MSC. See First Inv. Corp. of Marshall Islands v. Fujian Mawei Shipbuilding, Ltd., 703 F.3d 742, 748 (5th Cir. 2012) (due process requires personal jurisdiction to confirm award under the New York Convention). Only specific personal jurisdiction is at issue. See, e.g., Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915,919 (2011) (distinguishing “general or all-purpose jurisdiction, and specific or case-linked jurisdiction”. Conti, then, had to show that MSC “purposefully availed itself of the privilege of conducting activities within the forum State.” Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021) (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). MSC’s forum contacts must be its “own choice and not ‘random, isolated, or fortuitous.’” Id. at 1025 (quoting Keeton v. Hustler Mag., Inc., 465 U.S. 770, 774 (1984)). And, crucially, Conti’s claim against MSC “must arise out of or relate to” those contacts. Ibid. In other words, for specific personal jurisdiction to exist over MSC, “there must be ‘an affiliation between the forum and the underlying controversy.’” Ibid. (quoting Bristol-Myers Squibb Co. v. Superior Ct. of Cal., San Francisco Cnty., 582 U.S. 255, 262 (2017)).

 

 

Also instructive is the Second Circuit’s decision in SoléResort, which involved a petition asking a New York federal court to vacate a Florida arbitral award involving two foreign companies. 450 F.3d at 101–02. The defendant resisted personal jurisdiction on the ground that the plaintiff’s claim was only “about the actions of the arbitrators, not about the facts underlying the dispute that led to the arbitration.” Id. at 105. The Second Circuit disagreed. “Any arbitration proceeding,” the court reasoned, “is...an extension of the parties’ contract with one another,” and “without the contract, the arbitration, and its resultant judgment, a subsequent challenge to that judgment never could exist.” Id. at 104. Accordingly, the court found “a substantial relationship between a challenge to the arbitrators’ decision and the contract that provided for the arbitration.” Ibid. “While the arbitrators’ actions themselves took place outside New York,” the court concluded, “those actions necessarily bear a substantial relationship to the events underlying the contract that created the arbitration.” Id. at 105 (cf. Fn. 4 below).

 

 

4The SoléResort analysis has been adopted by the pertinent Restatement. The authors explain that “in determining whether the requirement of minimum contacts is met, account is not taken only of the arbitration but also of the underlying transaction.” Restatement (Third) of U.S. Law of Int’l Com.  Arb. §4.25 note (a)(ii) (citing SoléResort, 450 F.3d 100). Accordingly, “actions to enforce international arbitral awards do not call for any special personal jurisdictional rules. The adequacy of any particular exercise of personal jurisdiction is determined according to the generally applicable statutory and constitutional standards for the exercise of personal jurisdiction.” Id. at § 5.19 cmt. (a) (fn. 4).

 

 

Six other circuits follow an approach similar to the Tenth and Second Circuits with respect to evaluating personal jurisdiction over actions to confirm arbitral awards. That is, they consider a defendant’s contacts related to the underlying dispute that led to the arbitral award, and not only contacts related to the arbitration proceeding itself (cf. Fn. 5 below).

 

 

See Telcordia Tech, 458 F.3d at 178 (analyzing contacts between defendant and forum relevant to underlying dispute before finding personal jurisdiction to confirm a foreign arbitral award); Base Metal Trading, Ltd. v. OJSC “Novokuznetsky Aluminum Factory”, 283 F.3d 208, 215–16 (4th Cir. 2002) (considering lack of regular shipments between the two companies and contact with the United States to deny personal jurisdiction to confirm foreign arbitral award); Reynolds v. Int’l Amateur Athletic Fed’n, 23 F.3d 1110, 1116–17 (6th Cir. 1994) (considering state law tort and contract claims when determining personal jurisdiction to confirm a domestic arbitral award); Glencore Grain, 284 F.3d at 1123–24 (analyzing the sale of rice to California distributors in evaluating personal jurisdiction to confirm a foreign arbitral award); Greenfield Advisors LLC v. Salas, 733 F. App’x 364, 366–67 (9th Cir. 2018) (considering personal contacts between the appellant and state of Washington to find personal jurisdiction to enforce a foreign arbitral award); S & Davis Int’l, Inc. v. Republic of Yemen, 218 F.3d 1292, 1304–05 (11th Cir. 2000) (considering contacts regarding contractual breach to find personal jurisdiction to enforce a foreign arbitral award); Creighton, Ltd. v. Gov’t of Qatar, 181 F.3d 118, 127–28 (D.C. Cir. 1999) (considering phone calls, ongoing business, and other communications between Qatar and Tennessee in the underlying dispute to find no personal jurisdiction to confirm foreign arbitral award); GSS Grp. Ltd. v. Nat’l Port Auth., 680 F.3d 805, 817 (D.C. Cir. 2012) (finding no contacts between defendant and forum as to underlying dispute and thus dismissing for lack of personal jurisdiction). (Fn. 5).

 

Badgerow involved domestic arbitration governed by FAA Chapter One, see 9 U.S.C. §§1–16, whereas this case involves foreign arbitration under the New York Convention, governed by FAA Chapter Two, see id. §§201–208. As the district court carefully explained, Chapter Two lacks any textual indication that forbids looking to the underlying dispute in assessing personal jurisdiction to confirm an award under the Convention.

 

 

Even more telling is Chapter Two’s venue provision. An action to confirm a Convention-related award may be brought in any district court in which save for the arbitration agreement an action or proceeding with respect to the controversy between the parties could be brought, or in such court for the district and division which embraces the place designated in the agreement as the place of arbitration if such place is within the United States. Id. §204. This provision contains the same “save for” language as the analogous domestic provision addressed in Vaden (§4), which the Supreme Court held requires looking to the underlying dispute. See Vaden, 556 U.S. at 62–63. True, §204 addresses venue, not personal jurisdiction. But, as the district court pointed out, “it would only make sense for the personal jurisdiction analysis under the Convention to follow that of venue because otherwise it would lead to irrational results”—namely, being able to consider the underlying dispute for venue purposes but not for personal jurisdiction. This is another strong clue that Chapter Two, unlike the Chapter One provisions in Badgerow, does not forbid considering the parties’ dispute for purposes of assessing jurisdiction.

 

 

Next, we turn to the district court’s ruling that MSC waived any challenge to personal jurisdiction when its insurer issued the LOU. Recall that the LOU promised to pay Conti up to $220 million on any final judgment and was “given without prejudice to any and all rights or defenses MSC, its agents or affiliates have or may have.” MSC argues the district court erred because the LOU plainly reserved its defenses to Conti’s suit, including lack of personal jurisdiction. We agree.

 

 

“Louisiana law recognizes broad freedom to contract” and “contractual intent is determined by the words of the contract.” Luv N’ Care, Ltd. v. Groupo Rimar, 844 F.3d 442, 447 (5th Cir. 2016); see also La. Civ. Code art. 1971 (“Parties are free to contract for any object that is lawful, possible, and determined or determinable.”). Contractual provisions like the ones here may be “relevant” to a personal jurisdiction analysis, “but they are not dispositive.” See Haliburton Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522, 542 (5th Cir. 2019) (considering relevance of “choice-of-law provisions and forum-selection clauses” to personal jurisdiction analysis). When a party contractually submits to the court’s power for a “limited purpose,” it does “not waive its personal jurisdiction defense” for issues falling outside that purpose. Id. at 541.

 

 

Finally, MSC argues that, even if it is proper to consider contacts related to the underlying dispute, the district court erred in finding personal jurisdiction based only on the fact that the DVB shipped from the Port of New Orleans. We agree with MSC because that contact with New Orleans resulted not from MSC’s activity but rather that of its subsidiary, MSC (USA), and third parties. “Generally, a foreign parent corporation is not subject to the jurisdiction of a forum state merely because its subsidiary is present or doing business there.” Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983) (citing 2 J. Moore & J. Lucas, Moore’s Federal Practice ¶4.25[6], at 4–272 (2d ed. 1982)). “This presumption of institutional independence...may be rebutted, however, by clear evidence” that the two corporations are “fused...for jurisdictional purposes.” Diece-Lisa, 943 F.3d at 251 (quoting Freudensprung, 379 F.3d at 346).

 

 

(…) Furthermore, the record suggests MSC and MSC (USA) are in fact distinct entities. While MSC (USA) is wholly owned by MSC, the two corporations have different headquarters—MSC (USA) in New York and MSC in Geneva. They have different officers and directors. And the record does not show that MSC and MSC (USA) failed to observe corporate formalities. To the contrary, the only evidence on that score is the arbitration panel’s finding that MSC (USA) followed corporate formalities with its own subsidiary, the New Orleans Terminal LLC. Nor does any evidence show MSC’s exercising complete authority over MSC (USA)’s operations. This evidence cannot overcome the presumption of separateness between MSC (USA) and MSC for personal jurisdiction purposes.

 

 

(…) See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985) (explaining the “‘purposeful availment’ requirement ensures that a defendant will not be haled into a jurisdiction solely as a result...of the ‘unilateral activity of another party or a third person’” (quoting Hanson, 357 U.S. at 253; Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 417 (1984))). The district court thus lacked personal jurisdiction to confirm the London award.

 

 

 

 

 

(U.S. Court of Appeals for the Fifth Circuit, Jan. 29, 2024, Conti 11. Container Schiffarts-GMBH & Co. KG M.S., MSC Flaminia v. MSC Mediterranean Shipping Company S.A., Docket No. 22-30808)

U.S. Court of Appeals for the Tenth Circuit, Dental Dynamics, LLC, v. Jolly Dental Group, LLC, Docket No. 18-6107

Personal Jurisdiction

Specific Jurisdiction

Bill of Sale

Opinion Letter Sent from an Out-of-State Law Firm

Due Process Clause of the Fourteenth Amendment

Oklahoma Law

This case presents a question of personal jurisdiction. Namely, whether a federal court sitting in Oklahoma has specific personal jurisdiction over Dr. Scott Jolly—a dentist and Arkansas resident—and the limited liability company through which he runs his dentistry practice, Jolly Dental Group, LLC. The plaintiff below, Dental Dynamics, LLC, argues that three isolated business interactions and an allegedly fraudulent contract suffice to establish federal court jurisdiction over its breach of contract and fraud claims.

We disagree. With respect to Dental Dynamics’s breach of contract claim, Jolly Dental’s contacts with Oklahoma are too random, fortuitous, and attenuated to establish personal jurisdiction there. With respect to Dental Dynamics’s fraud claim, we conclude that Dental Dynamics fails to show Dr. Jolly’s allegedly tortious conduct sufficiently targeted Oklahoma to establish personal jurisdiction there. Accordingly, we AFFIRM the district court’s dismissal of Dental Dynamics’s claims for lack of personal jurisdiction.

Since 2008, Dr. Jolly has inquired into prospective business transactions with Dental Dynamics on three occasions. First, in 2008, Dr. Jolly contacted Dental Dynamics regarding the potential sale of a pre-owned piece of equipment he owned. Haller informed Dr. Jolly that she could not sell the machine. Next, in May 2017, Dr. Jolly engaged Dental Dynamics to broker the sale of a 2014 Planmex Promax MID X-Ray Unit (X-Ray unit) that is the subject of the present lawsuit. Third, in June 2017, Dr. Jolly contacted Dental Dynamics regarding the purchase of a separate X-Ray unit. Jolly Dental paid Dental Dynamics the purchase price for this unit. But after a defect was discovered with the machine, Dental Dynamics returned the purchase price to Jolly Dental.1 The parties prepared and executed these transactions through telephonic, email, and text communications.

Dental Dynamics’s present claims arise out of the second transaction. On or around May 20, 2017, Dental Dynamics secured the sale of the X-Ray unit from Jolly Dental to Dr. Joiner, a dentist practicing in California. On May 26, 2017, Jolly Dental, through Dr. Jolly, executed a bill of sale selling the X-Ray unit to Dental Dynamics. The bill of sale represents that the X-Ray unit is in “perfect working condition” and that the sale includes the X-Ray unit’s hardware, software, manuals, and “all accessories and any other items pertaining” to the X- Ray unit. Id. at 14–15. The negotiations pertaining to the bill of sale were conducted through text messages and email. To pay for the X-Ray unit and associated items, “Dr. Joiner tendered the sales price to Dental Dynamics in Oklahoma, and Dental Dynamics subsequently mailed a check . . . to Dr. Jolly.” Id. at 36.

The bill of sale notes that “disassembly, packaging, and shipment” would be handled by an independent support company. Id. at 14. Dental Dynamics does not dispute that the X-Ray unit was shipped directly from Dr. Jolly’s offices in Arkansas to Dr. Joiner’s offices in California without ever entering Oklahoma. After receipt of the X-Ray unit, Dr. Joiner discovered that it was not in perfect working condition as represented. Due to certain defects and missing hardware and software, the X-Ray unit Dr. Joiner received was “worthless” in that it would “cost more to repair than to purchase a brand new unit.” Id. at 9–10. Dr. Joiner notified Dental Dynamics of the X-Ray unit’s unsatisfactory condition.

In turn, Dental Dynamics brought the present action in federal court in Oklahoma, alleging breach of contract against Jolly Dental and fraud against Dr. Jolly. Dental Dynamics alleges Jolly Dental breached its contractual obligations outlined in the bill of sale by “failing to properly disassemble and crate the X-Ray Unit; failing to provide the software and computer hardware required . . . and materially misrepresenting the condition of the X-Ray Unit.” Id. at 10. With respect to its fraud allegations, Dental Dynamics alleges Dr. Jolly knowingly made false representations regarding the X-Ray unit’s condition and his intention to satisfactorily disassemble and crate the X-Ray unit to induce Dental Dynamics to secure the sale of the unit.

In response, Dr. Jolly and Jolly Dental (together Jolly Dental) moved to dismiss the action for lack of specific personal jurisdiction. Jolly Dental argues it lacks the requisite minimum contacts with Oklahoma to establish jurisdiction and that, even if the minimum contacts test is satisfied, exercising jurisdiction would be unreasonable.

The district court granted Jolly Dental’s motion, holding Dental Dynamics failed to establish specific personal jurisdiction over either its breach of contract or fraud claim.

To show personal jurisdiction over a nonresident in a diversity action, Dental Dynamics must demonstrate that jurisdiction is proper under the laws of the forum state—in this case Oklahoma—and that the exercise of jurisdiction complies with the Due Process Clause of the Fourteenth Amendment. Walden v. Fiore, 571 U.S. 277, 282 (2014); Fed. R. Civ. P. 4(k)(1)(A). This requires us to focus on state law, and particularly, the relevant state’s long-arm statute. That statute establishes the extent to which the state intends its courts to exercise jurisdiction over nonresidents. Oklahoma’s long-arm statute authorizes courts to “exercise jurisdiction on any basis consistent with the Constitution of this state and the Constitution of the United States.” Okla. Stat. Ann., tit. 12, § 2004(F). Neither party raises any objection based on the Oklahoma constitution. Accordingly, the analysis collapses into a single due process inquiry. See Old Republic, 877 F.3d at 903; Newsome v. Gallacher, 722 F.3d 1257, 1264 (10th Cir. 2013).

The Due Process Clause authorizes personal jurisdiction if two elements are met. First, a defendant must have “purposefully established minimum contacts within the forum state.” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Second, the assertion of personal jurisdiction must comport with traditional notions of fair play and substantial justice. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985).

The minimum contacts test for specific personal jurisdiction has two requirements: (1) a defendant must have “purposefully directed its activities at residents of the forum state,” and (2) the plaintiff’s injuries must arise out of the defendant’s forum-related activities. Old Republic, 877 F.3d at 904. With respect to the first requirement, purposeful direction ensures that defendants will not be haled into court in foreign jurisdictions solely as a result of “random, fortuitous, or attenuated contacts.” Burger King, 471 U.S. at 475. The mere foreseeability of causing injury in another state is insufficient on its own to establish purposeful direction. See Old Republic, 877 F.3d at 905.

The “purposeful direction” prong of the minimum contacts test is sometimes referred to as the “purposeful availment” prong. See, e.g., Dudnikov, 514 F.3d at 1071 (noting the interchangeability of these terms).

If the minimum contacts test is met, we must then assess whether exercising personal jurisdiction would offend traditional notions of fair play and substantial justice. See id. at 909. To do so, we consider the following factors: (1) the burden on the defendant; (2) the forum state’s interest in resolving the dispute;
(3) the plaintiff’s interest in receiving convenient and effective relief; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental social policies. See id.; see also Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1279–80 (10th Cir. 2005).

Analyzing purposeful direction with respect to Dental Dynamics’s breach of contract claim requires us to look to Jolly Dental’s continuing “relationships with the forum state and its residents.” Old Republic, 877 F.3d at 905; see also Burger King, 471 U.S. at 472. Although contractual obligations may create sufficient ties to establish jurisdiction, an out-of-state resident’s contract with a resident of the forum state is insufficient, standing alone, to create personal jurisdiction. See Burger King, 471 U.S. at 478; Benton v. Cameco Corp., 375 F.3d 1070, 1077 (10th Cir. 2004). In Burger King, the Supreme Court eschewed such “mechanical” tests in favor of looking to the “business negotiations,” “future consequences” of the contract, and the “actual course of dealing” between the parties. Burger King, 471 U.S. at 478–79.

Here, the record shows that the parties’ entire business relationship comprises three transactions over nine years. None of these transactions was negotiated or executed in person. Each transaction was a discrete occurrence, unrelated to the others in any meaningful way. On only two occasions did the parties reach an agreement, and only once—in the transaction subject to this lawsuit—was that agreement substantially performed.

These contacts are insufficient to show purposeful direction. Each transaction concerned the isolated sale or prospective sale of a piece of dental equipment without any long-term or continuing obligations involving Oklahoma. See Old Republic, 877 F.3d at 910 (finding no purposeful direction even where a contract with a forum-state entity was accompanied by the parties’ contemplation of “some potentially ongoing consequences” because the record lacked evidence of “any significant course of dealing” or long-term contractual commitments associated with the forum state). Moreover, the transactions implicated Oklahoma in only an attenuated fashion, as Dental Dynamics serves as a broker in transactions between dentists located across the United States. See C5 Med. Werks, LLC v. CeramTec GMBH, 937 F.3d 1319, 1325 (10th Cir. 2019) (holding no purposeful direction established where a party attended numerous trade shows in the forum state, but the location was selected by a third-party).

Dental Dynamics analogizes to Burger King, but the comparison confirms no purposeful direction exists here. In Burger King, the Supreme Court found minimal contacts satisfied due to a heavily negotiated and “carefully structured” 20-year franchise agreement that “envisioned continuing and wide-reaching contacts” with the forum state. 471 U.S. at 478–80. But in this case none of Burger King’s persuasive factors are present. The primary contract that Dental Dynamics relies on is a two-page bill of sale negotiated over email that envisions no enduring relationship between the parties and concerns only the sale of a single piece of equipment that never physically passed through the forum state.

(…) Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1418 (10th Cir. 1988) (“Ordinarily ‘use of the mails, telephone, or other international communications simply do not qualify as purposeful activity.’” (quoting Peterson v. Kennedy, 771 F.2d 1244, 1262 (9th Cir. 1985))).

In sum, the contemplated and executed business transactions between the parties are too attenuated to demonstrate Jolly Dental established sufficient minimum contacts with Oklahoma.

When analyzing tort-based claims such as Dental Dynamics’s fraud claim, we look to “the harmful effects [of Dr. Jolly’s conduct] in the forum state” to assess purposeful direction. Old Republic, 877 F.3d at 905. Purposeful direction in this context has three elements: (1) an intentional action; (2) expressly aimed at the forum state; and (3) with knowledge that the brunt of the injury would be felt in the forum state. See Newsome, 722 F.3d at 1264–65; see also Dudnikov, 514 F.3d at 1072.

This framework for analyzing personal jurisdiction in the intentional tort context stems originally from the Supreme Court’s decision in Calder v. Jones. 465 U.S. 783, 790 (1984) (holding personal jurisdiction in California proper in a libel suit by a California resident against a Florida reporter). In Walden v. Fiore, the Supreme Court elaborated on its holding in Calder. See 571 U.S. 277, 286–91 (2014). In Walden, a DEA agent in Georgia stopped two Nevadans who claimed to be professional gamblers returning home with approximately $97,000 in cash winnings. The DEA agent seized the currency and drafted an affidavit in conjunction with the forfeiture proceedings. The Nevadans filed suit in federal court in Nevada alleging that the DEA agent tortiously drafted a false affidavit.

A divided Ninth Circuit held personal jurisdiction existed under Calder and its progeny because the DEA agent “expressly aimed” his submission of the allegedly false affidavit at Nevada by submitting the affidavit with knowledge that it would affect persons with a significant connection to Nevada. See id. at 282.

The Supreme Court reversed. In doing so, the Court clarified that knowledge of an alleged victim’s out-of-state status, standing alone, cannot confer personal jurisdiction over a defendant engaging in allegedly tortious activity. The Court reiterated that the focus of the personal jurisdiction analysis is on the defendant’s relationship with the forum state, even in the intentional tort context. See id. at 282–83 (“The plaintiff cannot be the only link between the defendant and the forum.”).

Subsequent case law from this court confirms a defendant’s interaction with a plaintiff—even when allegedly tortious—is insufficient to establish personal jurisdiction. See Rockwood Select Asset Fund XI (6)-1, LLC v. Devine, 750 F.3d 1178, 1180 (10th Cir. 2014) (holding alleged falsehoods in an opinion letter sent from an out-of-state law firm defendant to a plaintiff in the forum state failed to establish jurisdiction).

These principles dictate the outcome here. As discussed above, Dental Dynamics fails to show Dr. Jolly had any connections with Oklahoma outside of the allegedly fraudulent misrepresentations and isolated incidents of outreach to Dental Dynamics. These communications into the forum-state are insufficient to establish Dr. Jolly “expressly aimed” his allegedly tortious misrepresentations at Oklahoma. See Rockwood, 750 F.3d at 1180. Nor does the fact that Dr. Jolly knew Dental Dynamics was an Oklahoma entity change this analysis. See C5 Med. Werks, 937 F.3d at 1324.

Secondary sources: Charles A. Wright, Arthur R. Miller & Adam N. Steinman, Federal Practice and Procedure § 1069.7 (4th ed. 2015).

(U.S. Court of Appeals for the Tenth Circuit, January 9, 2020, Dental Dynamics, LLC, v. Jolly Dental Group, LLC, Docket No. 18-6107, For Publication)

U.S. Court of Appeals for the First Circuit, Plixer International, Inc. v. Scrutinizer GMBH, Docket No. 18-1195

Jurisdiction: Specific personal jurisdiction: Trademark infringement: Internet: Websites: Due Process: Fifth Amendment: Interlocutory appeal:

Given the particular facts of this case, we affirm the thoughtful holding of the district court that the exercise of specific personal jurisdiction against a German corporation under Federal Rule of Civil Procedure 4(k)(2) does not offend the Due Process Clause of the United States Constitution. We note that this is an area in which the Supreme Court has not yet had the occasion to give clear guidance, and so we deliberately avoid creating any broad rules.

Scrutinizer GmbH (Scrutinizer) is a German corporation with its principal place of business in Kassel, Germany. Through its interactive, English-language website, Scrutinizer runs a "selfservice platform" that helps customers build better software. Scrutinizer brings its customers' code from a third-party hosting service like GitHub2 to its "controlled cloud environment," where it runs "software analysis tools" meant to "improve source-code quality, eliminate bugs, and find security vulnerabilities."

Customers who contract to use Scrutinizer's online service can pay only in euros. Scrutinizer's standard contract with those customers contains a forum-selection clause and a choice-of-law clause that provide that all lawsuits relating to the contract be brought in German courts and under German law. Scrutinizer maintains no U.S. office, phone number, or agent for service of process; it directs no advertising at the United States; and its employees do not go to the United States on business.

Scrutinizer provides its service globally.

Plixer International, Inc. (Plixer), a Maine corporation, sued Scrutinizer in federal district court in Maine on November 21, 2016, for trademark infringement.

(…) Scrutinizer moved for permission to file an interlocutory appeal under 28 U.S.C. § 1292(b). The district court granted that motion. The district court found that the matter met the standard for such an appeal: it involved a controlling question of law on which there was substantial ground for difference of opinion and the resolution of which would help bring an end to the litigation.

We granted this interlocutory appeal on the district court's recommendation.

Plixer's basis for asserting personal jurisdiction over Scrutinizer is Federal Rule of Civil Procedure 4(k)(2).

Rule 4(k)(2) states: For a claim that arises under federal law, serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to jurisdiction in any state's courts of general jurisdiction; and (B) exercising jurisdiction is consistent with the United States Constitution and laws.

Rule 4(k)(2) has three requirements: (1) the cause of action must arise under federal law; (2) the defendant must not be subject to the personal jurisdiction of any state court of general jurisdiction; and (3) the federal court's exercise of personal jurisdiction must comport with due process.

All parties agree that the first two requirements are met here. The question is whether personal jurisdiction comports with due process.

This is a federal question case, so constitutional limits on jurisdiction come from the Due Process Clause of the Fifth Amendment. The Fifth Amendment Due Process Clause requires the plaintiff to "show that the defendant has adequate contacts with the United States as a whole, rather than with a particular state."

To see if Scrutinizer's nationwide contacts are adequate, we turn to the familiar "minimum contacts" framework.

Plixer has asserted specific personal jurisdiction over Scrutinizer, so the minimum contacts inquiry has three prongs: relatedness, purposeful availment, and reasonableness.

That is, Plixer must show that (1) its claim directly arises out of or relates to the defendant's forum activities; (2) the defendant's forum contacts represent a purposeful availment of the privilege of conducting activities in that forum, thus invoking the benefits and protections of the forum's laws and rendering the defendant's involuntary presence in the forum's courts foreseeable; and (3) the exercise of jurisdiction is reasonable. A Corp., 812 F.3d at 59.

Scrutinizer has conceded the first requirement; we hold that Plixer has met the remaining two.

A Corp., 812 F.3d at 61 (holding that "the mere availability of a passive website" cannot by itself subject a defendant to personal jurisdiction in the forum).

Cossaboon v. Maine Med. Ctr., 600 F.3d 25, 35 (1st Cir. 2010) (noting that the running of a "website that is visible in a forum and that gives information about a company and its products" cannot alone support the exercise of jurisdiction).

The district court held that Scrutinizer had not merely made its website available in the United States; it had used that website to engage "in sizeable and continuing commerce with United States customers." Plixer, 293 F. Supp. 3d at 242. As a result, Scrutinizer "should not be surprised at United States-based litigation." Id. We agree.

(…) An objectively clearer picture of Scrutinizer's intent to serve the forum, the crux of the purposeful availment inquiry. See C.W. Downer, 771 F.3d at 66.

(…) Scrutinizer can take steps to limit access to its website. For instance, Scrutinizer could design its site to not interact with U.S. users, cf. Yahoo! Inc. v. La Ligue Contre Le Racisme et L'Antisemitisme, 433 F.3d 1199, 1203 (9th Cir. 2006), but it has not done so.

And Scrutinizer could take the low-tech step of posting a disclaimer that its service is not intended for U.S. users. See Bensusan Restaurant Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997); cf. Illinois v. Hemi Group LLC, 622 F.3d 754, 755 (7^th Cir. 2010). Again, it has not done so. Instead, Scrutinizer's website (https://scrutinizer-ci.com/) is globally accessible.

In contrast, Scrutinizer did take a step to deal with foreign contract-based litigation -- it included a forum-selection clause and a choice-of-law clause in its standard customer contract. Those clauses provide that all lawsuits be brought in German courts and under German law. But Scrutinizer never suggests that Plixer could bring this suit in an alternate forum, whether Germany or elsewhere. And the clauses do not apply here; Plixer is not a party to Scrutinizer's contract, and Scrutinizer does not suggest that Plixer is bound by the contract. As the district court correctly noted, those clauses suggest that Scrutinizer "knew it was extending its reach outside Germany." Plixer, 293 F. Supp. 3d at 241.

(…) Second, Scrutinizer voluntarily served U.S. customers. Specific personal jurisdiction must be based on a defendant's voluntary contact with the forum.

Third, Scrutinizer's purposeful U.S. contacts were sufficient to put Scrutinizer on notice that it should expect to be haled into U.S. court. Scrutinizer has "targeted the world" by making its website globally accessible. See Nicastro, 564 U.S. at 890 (Breyer, J., concurring). But Scrutinizer says that it could not reasonably anticipate specific jurisdiction because it did not specifically target the United States with its business. We disagree.

(…) Ultimately, although a close call, we conclude that the German company could have "reasonably anticipated" the exercise of specific personal jurisdiction based on its U.S. contacts. Scrutinizer's "regular flow or regular course of sales" in the United States show that it has purposefully availed itself of the U.S. forum. The record does not reveal what percentage of Scrutinizer's business came from the United States. Nor does the record reveal whether Scrutinizer ever did an online trademark search for the term "Scrutinizer," either before or after it sought U.S. customers.

(Since 2000, the public has been able to search and retrieve for free "the almost millions of pending, registered, abandoned, cancelled or expired trademark registrations" online. McCarthy on Trademarks and Unfair Competition § 19:6 (5th ed.)).

(…) The record does show that Scrutinizer used its website to obtain U.S. customer contracts. Those contracts yielded nearly $200,000 in business over three-and-a-half years. This is not a situation where a defendant merely made a website accessible in the forum.

In contrast, a New Jersey federal district court found no regular course of sales when, over about a year, fewer than ten in-state sales brought the defendant "less than $3,383 in revenue." Oticon, Inc. v. Sebotek Hearing Sys., LLC, 865 F. Supp. 2d 501, 514-15 (D. N.J. 2011). "Such scant sales activity" did not "justify the exercise of specific jurisdiction" there.

Reasonableness: Though Plixer has satisfied the first two prongs of the analysis, we must still see whether the exercise of jurisdiction here is fair and reasonable. We consider five "gestalt" factors: (1) the defendant's burden of appearing in the forum, (2) the forum's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.

We consider first the burden on Scrutinizer. (…) For further support, Scrutinizer points to the burden of cross-Atlantic travel. (…) and modern travel "creates no especially ponderous burden for business travelers," (…) A defendant hoping to show that travel burdens should make the difference must show that those burdens are "special or unusual." (…) many of the case's logistical challenges "can be resolved through the use of affidavits and video devices."

On the second factor, Scrutinizer does not dispute that the United States has an interest in adjudicating a dispute over the application of U.S. trademark law. (…) Further, the United States has an interest in remedying an alleged injury that occurs in the United States.

(…) "When minimum contacts have been established, often the interests of the plaintiff and the forum in the exercise of jurisdiction will justify even the serious burdens placed on the alien defendant."

(U.S. Court of Appeals for the First Circuit, Sept. 13, 2018, Plixer International, Inc. v. Scrutinizer GMBH, Docket No. 18-1195, Circuit Judge Lynch)

Une entreprise allemande propose ses services (dans le domaine digital) par le biais de son site Internet. Le site et les services sont accessibles dans le monde entier. Un certain nombre de clients sont domiciliés dans divers états U.S. Ils rapportent à l’entreprise un chiffre d’affaire non négligeable.

L’entreprise n’a pas davantage de présence aux Etats-Unis. Elle n’y a ni présence physique ni employé. Elle n’a pas nommé d’agent auquel un envoi officiel pourrait être notifiée.

Une entreprise de l’état du Maine ouvre action devant la cour de district fédérale pour violation du droit des marques.

La question de la compétence de la cour est litigieuse.

En application du Cinquième Amendement de la Constitution fédérale (Due Process Clause), et tout en reconnaissant l’absence de jurisprudence de la Cour Suprême fédérale sur les questions précises que pose le cas d’espèce, le Premier Circuit fédéral juge que les conditions de la juridiction personnelle spécifique sont données, en précisant que la décision se limite aux faits de la cause et ne doit pas être interprétée largement. Le critère déterminant au sens du Cinquième Amendement est celui des contacts suffisants avec les Etats-Unis plutôt qu’avec l’un de ses états en particulier.

L’entreprise allemande n’a pas bloqué l’accès de son site aux clients U.S., n’a même pas posté un disclaimer refusant les clients U.S., mais, au contraire, leur propose, ainsi qu’au reste du monde, de contracter avec elle par le biais d’un site Internet en anglais. Elle a exécuté contre paiement nombre de prestations en faveur de nombre de clients U.S., et devait ainsi s’attendre à être actionnée devant une cour U.S. Le fait d’avoir inséré dans ses conditions contractuelles la loi allemande comme droit applicable et une cour allemande comme Tribunal compétent n’est d’aucun secours à l’entreprise allemande : bien au contraire, ces indications démontrent une volonté de s’engager internationalement, et la demanderesse à l’action en violation du droit à la marque n’est pas en rapport contractuel avec l’entreprise allemande.

Enfin, reconnaître la compétence de la cour de district fédérale satisfait aussi la condition d’une reconnaissance équitable : les voyages transatlantiques ne sont pas un fardeau qui ne saurait être exigé. D’autant que les productions de pièces et l’usage de moyens vidéos peuvent permettre d’éviter le déplacement de personnes. Un voyage transatlantique qui serait spécialement problématique peut permettre une décision d’incompétence de la cour U.S.

Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., Docket 16-466

Specific Jurisdiction: Due Process Clause: Fourteenth Amendment: Fifth Amendment: Federalism:

Reverses and remands 1Cal. 5th 783, 377 P. 3d 874 (S221038, August 29, 2016, Bristol-Myers Squibb v. Superior Court of San Francisco County).

(…) We granted certiorari to decide whether the California courts’ exercise of jurisdiction in this case violates the Due Process Clause of the Fourteenth Amendment. 580 U. S. ___ (2017).

(California law provides that its courts may exercise jurisdiction “on any basis not inconsistent with the Constitution . . . of the United States,” Cal. Civ. Proc. Code Ann. §410.10 (West 2004)).

(…) Fourteenth Amendment’s Due Process Clause, which “limits the power of a state court to render a valid personal judgment against a nonresident defendant,” World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 291 (1980).

(…) The Due Process Clause, acting as an instrument of interstate federalism.

Our settled principles regarding specific jurisdiction control this case. In order for a court to exercise specific jurisdiction over a claim, there must be an “affiliation between the forum and the underlying controversy, prin­cipally, an activity or an occurrence that takes place in the forum State.” Goodyear Dunlop Tires Operations, S. A. v. Brown, 564 U. S. 915, 919 (2011).

(…) Even regu­larly occurring sales of a product in a State do not justify the exercise of jurisdiction over a claim unrelated to those sales.

(…) What is needed—and what is missing here—is a connection between the forum and the specific claims at issue.

(…) Walden, 571 U. S., at ___ (slip op., at 8): In that case, Nevada plaintiffs sued an out-of-state defendant for conducting an allegedly unlawful search of the plaintiffs while they were in Georgia preparing to board a plane bound for Nevada. We held that the Nevada courts lacked specific jurisdiction even though the plain­tiffs were Nevada residents and “suffered foreseeable harm in Nevada.” Id., at ___ (slip op., at 11). Because the “relevant conduct occurred entirely in Georgia . . . the mere fact that this conduct affected plaintiffs with con­nections to the forum State did not suffice to authorize jurisdiction.” Id., at ___ (slip op., at 14).

In today’s case, the connection between the nonresi­dents’ claims and the forum is even weaker. The relevant plaintiffs are not California residents and do not claim to have suffered harm in that State. In addition, as in Wal­den, all the conduct giving rise to the nonresidents’ claims occurred elsewhere. It follows that the California courts cannot claim specific jurisdiction.

(…) (Keeton held that there was jurisdiction in New Hampshire to consider the full measure of the plaintiff ’s claim, but whether she could actually recover out-of-state damages was a merits question governed by New Hampshire libel law).

(Rush v. Savchuk, 444 U. S. 320, 332 (1980); see Walden, 571 U. S., at ___ (slip op, at 8) (“A defendant’s relationship with a . . . third party, standing alone, is an insufficient basis for jurisdiction”)).

(…) In addition, since our decision concerns the due process limits on the exer­cise of specific jurisdiction by a State, we leave open the question whether the Fifth Amendment imposes the same restrictions on the exercise of personal jurisdiction by a federal court. See Omni Capital Int’l, Ltd. v. Rudolf Wolff & Co., 484 U. S. 97, 102, n. 5 (1987).

(U.S.S.C., June 19, 2017, Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., Docket 16-466, J. Alito (only J. Sotomayor filed a dissenting opinion)).

Notion de "specific jurisdiction", telle que limitée par la Clause "Due Process" du Quatorzième Amendement, en cas de procédure devant le Tribunal d'un état, impliquant plusieurs demandeurs, certains domiciliés hors de l'état du for.

La Cour rappelle sa jurisprudence : un Tribunal est compétent s'il existe un lien entre le for et la prétention déduite en justice, par exemple suite à une activité ou à un événement qui s'est produit dans l'état du for. (En l'espèce, action de classe en Californie contre un fabricant de médicament. Les demandeurs californiens peuvent invoquer un dommage subi en Californie, suite à un achat du produit en Californie. Ces éléments ne peuvent pas être invoqués par les demandeurs domiciliés dans un autre état).

Des ventes régulières dans un état ne suffisent pas à fonder la compétence des Tribunaux de cet état si la prétention n'est pas liée aux ventes.

Dans une décision Walden, des demandeurs domiciliés au Nevada avaient agi devant le Tribunal du Nevada contre un défendeur domicilié en Géorgie. Les prétentions en dommages-intérêts découlaient d'une fouille prétendument illégale subie en Géorgie juste avant d'embarquer un vol à destination du Nevada. La Cour a jugé que les Tribunaux du Nevada n'étaient pas compétents (absence de "specific jurisdiction"), même si les demandeurs étaient résidents du Nevada et même s'ils subissaient un dommage dans cet état. La conduite relevante s'était en effet produite entièrement en Géorgie.

En l'espèce, la connexion entre les prétentions des demandeurs hors de l'état du for et le for lui-même est encore plus ténue que dans Walden. Ces demandeurs ne résident pas en Californie et n'ont pas subi de dommage dans cet état. En outre, comme dans Walden, la conduite à la base des prétentions s'est entièrement déroulée hors de l'état du for. Dès lors, les cours californiennes ne sont pas compétentes au sens de la "specific jurisdiction".

(Si la compétence est admise s'agissant de prétentions de parties demanderesses domiciliées hors de l'état du for, la question de savoir si ces demanderesses peuvent récupérer la totalité de leur préjudice subi hors de cet état est une question qui se juge à la lumière du droit de l'état du for, cf. décision Keeton).

(Les relations du défendeur avec un tiers, domicilié, lui, dans l'état du for, sont insuffisantes à conférer compétence spécifique).

La Cour laisse ouverte la question de savoir si le Cinquième Amendement impose à la compétence d'une cour fédérale les mêmes limites que celles décrites ci-dessus, qui ne concernent que la compétence spécifique des cours d'un état sous l'angle du Quatorzième Amendement.

Walden v. Fiore, Docket 12-574

Jurisdiction: personal jurisdiction: specific jurisdiction: the Fourteenth Amendment’s Due Process Clause requires that the nonresident have “certain minimum contacts” with the forum State, International Shoe Co. v. Washington, 326 U. S. 310, 316. The inquiry into the “minimum contacts” necessary to create specific jurisdiction focuses “on the relationship among the de­fendant, the forum, and the litigation.” Keeton v. Hustler Magazine, Inc., 465 U. S. 770, 775. For a State to exercise jurisdiction con­sistent with due process, that relationship must arise out of contacts that the “defendant himself” creates with the forum, Burger King Corp. v. Rudzewicz, 471 U. S. 462, 475, and must be analyzed with regard to the defendant’s contacts with the forum itself, not with per­sons residing there, see, e.g., International Shoe, supra, at 319. The plaintiff cannot be the only link between the defendant and the fo­rum. These same principles apply when intentional torts are in­volved. See Calder v. Jones, 465 U. S. 783, 788–789. (…) Here, Petitioner lacks the “minimal contacts” with Nevada that are a prerequisite to the exercise of jurisdiction over him. No part of peti­tioner’s course of conduct occurred in Nevada, and he formed no ju­risdictionally relevant contacts with that forum. The Ninth Circuit reached its contrary conclusion by improperly shifting the analytical focus from petitioner’s contacts with the forum to his contacts with respondents, obscuring the reality that none of petitioner’s chal­lenged conduct had anything to do with Nevada itself. Respondents emphasize that they suffered the “injury” caused by the delayed re­turn of their funds while residing in Nevada, but Calder made clear that mere injury to a forum resident is not a sufficient connection to the forum. The proper question is whether the defendant’s conduct connects him to the forum in a meaningful way: here, respondents’ claimed injury does not evince such a connection. The injury oc­curred in Nevada simply because that is where respondents chose to be when they desired to use the seized funds. Other possible contacts noted by the Ninth Circuit—that respondents’ Nevada attorney con­tacted petitioner in Georgia, that cash seized in Georgia originated in Nevada, and that funds were returned to respondents in Nevada— are ultimately unavailing (U.S.S.Ct., 25.02.2014, Walden v. Fiore, Docket 12-574, J. Thomas, unanimous).

Compétence d’une cour de district fédérale quand le défendeur n’est pas domicilié dans l’état du for : cette décision concerne un cas de juridiction personnelle spécifique, et non pas générale. Un représentant des forces de l’ordre de l’état de Géorgie (U.S.) avait saisi une somme d’argent à un particulier appréhendé dans l’état de Géorgie. Cette personne est ensuite rentrée à son domicile en Arizona. Puis l’argent saisi à tort lui a été restitué. La personne a agi en réparation devant une cour fédérale de l’état de l’Arizona. La Cour Suprême dans cette affaire nie la compétence de la cour de district fédérale, pour défaut de juridiction personnelle, cela au motif de l’absence de contacts minimaux suffisants du défendeur avec le for (exigés par le droit à un procès équitable au sens du Quatorzième Amendement). En l’espèce, tout ce qui rattache la partie géorgienne au demandeur est son rapport personnel à ce dernier, ce qui constitue un contact insuffisant. Les contacts minimaux à considérer sont ceux que le défendeur a créés lui-même avec le for. Ces principes sont les mêmes si le demandeur invoque un « tort » intentionnel. L’existence d’un dommage qui porte préjudice à un résident du for ne constitue pas un contact suffisant en soi. La question relevante est celle de savoir si la conduite du défendeur le relie au for.