Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-05129/USCOURTS-cand-3_07-cv-05129-2/pdf.json

Parties Involved:
Applied Risk Services, Inc.
Plaintiff
Applied Underwriters, Inc.
Plaintiff
Combined Management, Inc.
Defendant

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1 All parties have consented to my jurisdiction

pursuant to 28 U.S.C § 636(c) for all proceedings, including

entry of final judgment.

1

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

APPLIED UNDERWRITERS, INC. a

Nebraska Corporation, and

APPLIED RISK SERVICES, INC.,

a Nebraska Corporation,

Plaintiff(s),

v.

COMBINED MANAGEMENT, INC., a

Maine Corporation, et al.,

Defendant(s).

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No. C07-5129 BZ

ORDER GRANTING MOTION TO

DISMISS FOR LACK OF PERSONAL

JURISDICTION

Plaintiffs are insurance brokers and agents that sued

defendant, alleging that defendant failed to pay worker’s

compensation insurance premiums.1

 Defendant is a human

resources company based in Maine. It contacted Virginia

Surety Company, Inc., an Illinois based company, and inquired

about purchasing worker’s compensation insurance for its

employees in Maine. Virginia Surety designated plaintiffs,

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2 Both plaintiffs and defendant have filed requests

pursuant to Federal Rule of Evidence 201 to take judicial

notice of facts contained in declarations filed in the initial

suit before the United States District Court of Nebraska. Both

requests are GRANTED.

2

based in Nebraska, as its agents to broker the insurance

policy. Plaintiff Applied Risk Services, Inc. is registered

to sell insurance in Maine. Plaintiff Applied Underwriters,

Inc. is the parent company. The parties negotiated the terms

of the policy over the telephone, via facsimile, and through

interstate mail. During all of the negotiations, the

individuals negotiating on behalf of plaintiffs were located

in San Francisco, California. Defendant’s representatives

were aware that they were contacting and corresponding with

plaintiffs’ representatives in California. The insurance was

ultimately placed with Virginia Surety, now known as Combined

Specialty Insurance Company. The policy was performed in

Maine, where the insured’s employees were located, or in

Nebraska, where claims were processed and payments were

received. 

Plaintiffs initially filed suit in Nebraska and defendant

successfully moved to dismiss the complaint for lack of

personal jurisdiction.2 Plaintiffs refiled their action in

the Northern District of California and defendant has again

moved to dismiss for lack of personal jurisdiction.

The parties agree that California’s long arm statute,

California Code of Civil Procedure § 410.10, allows the

exercise of personal jurisdiction on any basis provided under

the federal constitution. Plaintiffs contend that this court

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3

has specific jurisdiction over defendant. In order to find

specific jurisdiction: “1) the nonresident defendant must have

purposefully availed himself of the privilege of conducting

activities in the forum by some affirmative act or conduct; 2)

plaintiff's claim must arise out of or result from the

defendant's forum-related activities; and 3) exercise of

jurisdiction must be reasonable.” Roth v. Marquez, 942 F.2d

617, 620 - 21 (9th Cir. 1985).

“[T]he purposeful availment analysis turns upon whether

the defendant’s contacts are attributable to ‘actions by the

defendant himself’ or conversely to the unilateral activity of

another party.” Hirsch v. Blue Cross, Blue Shield of Kansas

City, 800 F.2d 1474, 1478 (9th Cir.1986) (quoting Burger King,

471 U.S. at 475, 105 S.Ct. At 2184) (emphasis in Burger King). 

Here, defendant did not reach out to California. Instead, the

Nebraska plaintiffs, at the request of an Illinois insurer,

had their California representatives reach out to defendant in

Maine. Discussions over the telephone and the use of mail

when contacting a forum state are insufficient, alone, to

establish personal jurisdiction. See Roth, 942 F.2d at 622. 

Defendant’s telephone conversations and correspondence with

plaintiffs in California regarding an insurance policy with an

Illinois insurer that would be performed in Maine and Nebraska

do not amount to purposeful contacts with California such that

defendant would “reasonably anticipate being haled into court

[here].” World-Wide Volkswagen Corp. v. Woodson, 444 U.S.

286, 297 (1980). 

That defendant entered into a contract with Combined

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4

Specialty through plaintiffs’ representatives located in

California does not establish sufficient minimum contacts in

this forum. See Burger King Corp. v. Rudzewicz, 471 U.S. 462,

478 - 79 (1985). A “‘contract’ is ‘ordinarily but an

intermediate step serving to tie up prior business

negotiations with future consequences which themselves are the

real object of the business transaction.’” Id. quoting

Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 316 - 17

(1943). In a contract case, the sufficiency of minimum

contacts is evaluated by examining the following factors:

“prior negotiations and contemplated future consequences,

along with the terms of the contract and the parties' actual

course of dealing.” Burger King Corp., 471 U.S. at 479.

Plaintiffs contend that jurisdiction is appropriate

because the parties had a continuing relationship that

contemplated contractual performance in California. 

Although the terms of the contract were negotiated with people

in California, the terms of the contract, the contemplated

future consequences of the contract and the parties course of

dealings do not support a finding of jurisdiction in this

forum. See Burger King Corp., 471 U.S. at 479. Defendant

contracted with plaintiffs to obtain worker’s compensation

insurance for its employees who were located in Maine. In the

declaration of Todd Brown that plaintiffs filed before the

District Court in Nebraska, plaintiffs admit that they issued

the insurance policies in Nebraska, defendant’s payments were

sent to Nebraska, the payments were processed in Nebraska,

customer services questions were directed to plaintiffs’

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3 During oral argument, plaintiffs asserted that the

nub of the dispute was defendant’s purported breach of a profit

sharing agreement with respect to premiums and that this

agreement had significant California contacts. Plaintiff also

admitted that the profit sharing agreement is not part of the

record. Accordingly, the purported breach of this agreement is

not properly before the court on this motion.

5

Nebraska office, claims were submitted to Nebraska, and claims

checks were processed, issued and forwarded from plaintiffs’

Nebraska office. Nothing before me indicates that the

contract for insurance was performed, or contemplated

performance, in California.3

Because I have found that defendant did not establish

sufficient minimum contacts with California to constitute

purposeful availment, I do not need to address the parties

remaining arguments. Defendant’s motion to dismiss is GRANTED

and plaintiffs’ case is DISMISSED. 

Dated: December 5, 2007

 Bernard Zimmerman 

 United States Magistrate Judge

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