Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-03054/USCOURTS-ca8-14-03054-0/pdf.json

Parties Involved:
Creative Calling Solutions, Inc.
Appellant
LF Beauty Ltd.
Appellee

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-3054

___________________________

Creative Calling Solutions, Inc.,

lllllllllllllllllllll Plaintiff - Appellant,

v.

LF Beauty Ltd.,

lllllllllllllllllllll Defendant - Appellee.

____________

Appeal from United States District Court 

for the Southern District of Iowa - Des Moines

____________

 Submitted: March 24, 2015

 Filed: August 21, 2015

____________

Before RILEY, Chief Judge, COLLOTON and KELLY, Circuit Judges.

____________

COLLOTON, Circuit Judge.

Creative Calling Solutions, Inc., an Iowa corporation, sued LF Beauty Ltd. of

Hong Kong for breach of contract. The district court granted LF Beauty’s motion to

dismiss for lack of personal jurisdiction, after considering the contract and affidavits

submitted by both parties. We reverse the dismissal because a reasonable jury could

find that LF Beauty had sufficient contacts with Iowa to justify the exercise of

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personal jurisdiction and that the exercise of jurisdiction would not offend traditional

notions of fair play and substantial justice.

I.

Creative Calling, an Iowa corporation with its principal place of business in

Iowa, designs, develops, and sells beauty products. LF Beauty is a Hong Kong

corporation, with its principal place of businessin Hong Kong, that providesservices,

including product and sample development, shipping oversight, and production

planning. LF Beauty contacted Alan Unger, the President and CEO of Creative

Calling, in Iowa to solicit business. LF Beauty sought to manage Creative Calling’s

operations infrastructure in China in exchange for a fee and e-mailed Unger a

PowerPoint presentation describing the proposed services. After three months of

negotiation, Unger traveled to Hong Kong to execute the contract between LF Beauty

and Creative Calling in March 2012. 

The contract provided that LF Beauty would oversee Creative Calling’s

operations in China, including managing production processes at factories of third

parties. LF Beauty managed Creative Calling’s supply chain pursuant to the contract

and communicated extensively with CreativeCalling electronically and by telephone

for nearly two years.

The contract also required that LF Beauty make pre-production samples, that

CreativeCalling approve those samples, and that LF Beauty’s expenditures on freight

to send samples to Creative Calling would be passed through with no additional fee. 

LF Beauty shipped thousands of both pre-production and production samples that

were made in China by third party factories from its office in Hong Kong to Creative

Calling in Iowa for close to two years.

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In exchange for these services, the contractrequiredCreativeCalling to payLF

Beauty a fee or, in some circumstances, to reimburse LF Beauty for costs. LF Beauty

was to receive payments from Creative Calling’s customers on its behalf, and then

remit to Creative Calling the proceeds less certain deductions. Pursuant to those

provisions, LF Beautymade significant paymentstoCreative Calling in Iowa. No LF

Beauty agents or employees visited Iowa to establish or maintain its business

relationship with Creative Calling, and LF Beauty has no connection with Iowa

outside of this business relationship.

Almost two years after Creative Calling and LF Beauty executed the contract,

Creative Calling filed suit in Iowa court. Creative Calling alleged that LF Beauty

breached the contract by sending samples that could not be used for marketing or

sales for various reasons, including that the sample containers were incorrectly

labeled, that the samples were contaminated, and that the samples were improperly

packaged. LF Beauty removed the suit to federal court and moved to dismiss for lack

of personal jurisdiction under Fed. R. Civ. P. 12(b)(2). Both parties submitted

affidavits with their briefing on the motion to dismiss, and LF Beauty filed the

contract as an exhibit. The district court granted LF Beauty’s motion, relying in part

on the contract and the parties’ affidavits. Creative Calling appeals, and we review

the district court’s decision de novo. Dever v. Hentzen Coatings, Inc., 380 F.3d 1070,

1072 (8th Cir. 2004).

 II.

To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must

plead “sufficient facts to support a reasonable inference that the defendant[] can be

subjected to jurisdiction within the state.” K-V Pharm. Co. v. J. Uriach & CIA, S.A.,

648 F.3d 588, 591-92 (8thCir. 2011) (alteration in original) (internal quotation marks

omitted). But where, as here, the parties submit affidavits to bolster their positions

on the motion, and the district court relies on the evidence, the motion isin substance

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one for summary judgment. Radaszewski ex rel. Radaszewski v. Telecom Corp., 981

F.2d 305, 309-10 (8th Cir. 1992); cf. Blair v. Wills, 420 F.3d 823, 826-27 (8th Cir.

2005). The plaintiff bears the burden of proof on the issue of personal jurisdiction,

and must establish jurisdiction by a preponderance of the evidence at trial or when the

court holds an evidentiary hearing. Dakota Indus., Inc. v. Dakota Sportswear, Inc.,

946 F.2d 1384, 1387 (8th Cir. 1991). At the motion stage, the action should not be

dismissed for lack of jurisdiction if the evidence, viewed in the light most favorable

to Creative Calling, is sufficient to support a conclusion that the exercise of personal

jurisdiction over LF Beauty is proper. See Radaszewski ex rel. Radaszewski, 981 F.2d

at 309-10; Fed. R. Civ. P. 56(a).

A federal court may assume jurisdiction over a defendant in a diversity action

if the forum State’s long-arm statute permits the exercise of personal jurisdiction and

that exercise is consistent with the Due Process Clause ofthe Fourteenth Amendment. 

K-V Pharm. Co., 648 F.3d at 592. Iowa’s long-arm statute is co-extensive with “the

widest due process parameters” permitted by the Constitution. Hammond v. Fla.

Asset Fin. Corp., 695 N.W.2d 1, 5 (Iowa 2005). The district court may thus assert

personal jurisdiction over LF Beauty if the exercise of jurisdiction comports with due

process.

The Due Process Clause permits the exercise of “general jurisdiction” to hear

“any and all claims against” a defendant if its “affiliations with the State are so

continuous and systematic as to render [it] essentially at home in the forum State.” 

Daimler AG v. Bauman, 134 S. Ct. 746, 754 (2014) (internal quotation marks

omitted). “Specific jurisdiction,” by contrast, is proper when a defendant has certain

contacts with the forum State and the cause of action arises out of those contacts. Id.

Creative Calling argues that LF Beauty is subject to specific jurisdiction in Iowa to

answer Creative Calling’s breach of contract claim.

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Due process requires that a defendant have certain “minimum contacts” with

the forum State for the State to exercise specific jurisdiction. See World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980). This connection must be

based on “some act by which the defendant purposefully avails itself of the privilege

of conducting activities within the forum State, thus invoking the benefits and

protections of its laws.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75

(1985) (internal quotation mark omitted). The defendant’s contacts with the forum

must thus be more than “random, fortuitous, or attenuated,” and must permit the

defendant to “reasonably anticipate being haled into court there.” Id. (internal

quotation marks omitted).

To assess whether a defendant has purposefully availed itself of the forum and

established minimum contacts, we examine the nature, quality, and quantity of the

defendant’s contacts with the forum State and the connection between the cause of

action and those contacts. See Digi-Tel Holdings, Inc. v. Proteq Telecomm. (PTE),

Ltd., 89 F.3d 519, 522-23 (8th Cir. 1996). For contractual claims, personal

jurisdiction is proper where the defendant “reach[es] out beyond one state and

create[s] continuing relationships and obligations with citizens of another state.” 

Burger King Corp., 471 U.S. at 473 (internal quotation marks omitted). But a

contract with a citizen of a State alone is insufficient to establish minimum contacts

with that forum. Id. at 478. To determine whether a defendant purposefully

established minimum contacts with the forum, we must evaluate “prior negotiations

and contemplated future consequences, along with the terms of the contract and the

parties’ actual course of dealing.” Id. at 479.

CreativeCalling has presented sufficient facts for a reasonable jury to conclude

that LF Beauty established minimum contacts with Iowa that permit the exercise of

personal jurisdiction. A defendant’s solicitation of a business relationship with a

company incorporated in the forum State that takes place within that State is a

relevant contact in determining whether its courts may exercise personal jurisdiction.

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See Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 822-24 (8th Cir. 2014). LF

Beauty first contacted Creative Calling in Iowa to solicit business. LF Beauty then

corresponded numerous times with Creative Calling via e-mail and telephone while

negotiating the contractfor the next three months. After the contract negotiations had

concluded and the contract was executed, Creative Calling and LF Beauty

communicated daily via e-mail and telephone for close to two years. While such

communications “do not themselves establish jurisdiction,” they “may be used to

support the exercise of personal jurisdiction.” Digi-Tel Holdings, Inc., 89 F.3d at

523. At least sixteen LF Beauty employees corresponded with Creative Calling in

Iowa via e-mail during this time, thus supporting the conclusion that LF Beauty

purposefully established numerous contacts within the forum state. See K-V Pharm.

Co., 648 F.3d at 593-95.

Creative Calling argues that LF Beauty’s shipment of samples to Creative

Calling in Iowa is a significant contact with the forum. LF Beauty, citing Digi-Tel

Holdings, responds that mailing samples is not a significant contact because the

samples were not LF Beauty products and the shipping was only incidental to LF

Beauty’s performance of the contract. We said in Digi-Tel Holdings that a

defendant’s shipment of cell phone samples “into the forum represents a ‘casual’ or

‘fortuitous’ contact rather than a significant contact with the forum.” 89 F.3d at 523. 

But in Digi-Tel Holdings, the defendant shipped only four samples to the plaintiff in

the forum State, and there is no indication that the contract required or contemplated

that shipment. See id. 

The contract in this case explicitly called for LF Beautyto make pre-production

samples and required Creative Calling to approve those samples. The agreement thus

contemplated that LF Beauty would send those samplesto CreativeCalling at its only

place of business in Iowa. The contract also plainly implied that LF Beauty was

responsible for shipping pre-production and production samples, as it required

Creative Calling to reimburse LF Beauty for the costs of shipping samples. LF

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Beauty mailed thousands of both pre-production and production samples fabricated

in China to Creative Calling in Iowa, according to an affidavit introduced by Creative

Calling. Although LF Beauty countered this affidavit with evidence that some of the

production samples were mailed directly from the factories in China to Creative

Calling, we must consider the evidence in the light most favorable toCreative Calling

at this stage of the proceeding. Thus, unlike in Digi-Tel Holdings, “the terms of the

contract and the parties’ actual course of dealing” demonstrate that LF Beauty

purposefully established significant contacts with Iowa by mailing thousands of

samples. See Burger King Corp., 471 U.S. at 479. That LF Beauty did not itself

manufacture the samples, and that the samples were of Creative Calling’s products,

does not alter the conclusion that LF Beauty’s shipment of thousands of samples

pursuant to the contract constitutes a significant and purposeful connection with the

forum.

The contract in this case also provided for LF Beauty to receive payment from

customers on behalf of Creative Calling and to forward these payments (less a

deduction for LF Beauty) to Creative Calling. This type of contractual provision,

requiring a defendant to remit payment to a company located in the forum State, and

the defendant’s performance of that term, is a purposeful contact with the forum. K-V

Pharm. Co., 648 F.3d at 593-94. According to Unger of Creative Calling, LF Beauty

in fact made significant payments to Creative Calling in Iowa.

In sum, we conclude that Creative Calling has identified sufficient facts to

support a reasonable inference that LF Beauty established contacts with Iowa that

permit the exercise of personal jurisdiction. LF Beauty first contacted Creative

Calling in Iowa to solicit its business, engaged in daily communications with Creative

Calling for almost two years after contractual negotiations had concluded, shipped

thousands of pre-production and production samplesto Iowa pursuant to the contract,

and remitted payments to Creative Calling in Iowa under the agreement. Because

CreativeCalling’s breach of contract claimalleges thatLF Beauty delivered defective

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samples and thus arises out of and relates to this connection with Iowa, LF Beauty’s

minimumcontacts permit the exercise ofspecific jurisdiction in this case. See Burger

King Corp., 471 U.S. at 472.

Even where a party has minimum contacts with a forum, jurisdiction can still

be unreasonable. The Due Process Clause forbids the exercise of personal

jurisdiction “under circumstances that would offend ‘traditional notions of fair play

and substantial justice.’” Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102,

113 (1987) (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)); see

Ferrell v. W. Bend Mut. Ins. Co., 393 F.3d 786, 790 (8th Cir. 2005). To assess

whether the exercise of jurisdiction over LF Beauty, a foreign defendant, is

reasonable, we consider the interests of the forum State, the burden on the defendant,

and the plaintiff’s interest in obtaining relief. See Asahi Metal Indus. Co., 480 U.S.

at 113-15. “Great care and reserve should be exercised when extending our notions

of personal jurisdiction into the international field,” id. at 115 (internal quotation

marks omitted), although “[w]hen minimumcontacts 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.” Id. at 114.

Minimum contacts have been established here, and Iowa “has an obvious

interest in providing a local forum in which its residents may litigate claims.” DigiTel Holdings, Inc., 89 F.3d at 525. The parties’ respective interests do not militate

strongly against personal jurisdiction in Iowa. While defending a suit in Iowa would

be burdensome for LF Beauty, obtaining relief through litigation in Hong Kong

would be burdensome for Creative Calling. The allegedly defective samples that are

the focus of this breach of contract suit are located in Iowa; at least some of the

samples likely would be introduced at trial. LF Beauty contends that five necessary

witnesses—three current and two former LF Beauty employees—are located in Hong

Kong. Creative Calling responds that three LF Beauty employees who will be

important witnesses are located in New York and Texas, and that other witnesses are

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located in Iowa. Because the samples are in Iowa, there are witnesses in both Hong

Kong and Iowa, and three witnesses who are LF Beauty employees are in the United

States, the respective interests of the two parties do not weigh against the exercise of

jurisdiction over LF Beauty in Iowa. Cf. K-V Pharm. Co., 648 F.3d at 595; Digi-Tel

Holdings, Inc., 89 F.3d at 525. In these circumstances, the exercise of personal

jurisdiction would not offend traditional notions of fair play and substantial justice.

LF Beauty responds by citing the contract’s selection of Hong Kong courts as

a non-exclusive forum and its choice of Hong Kong law. LF Beauty contends that

these provisions diminish Iowa’s interest in providing a forum for its residents and

show that litigation in Hong Kong is not inconvenient for Creative Calling. Creative

Calling’s assent to non-exclusive jurisdiction in Hong Kong, if enforceable, could

establish that Hong Kong courts may exercise personal jurisdiction over Creative

Calling under United States law. Burger King Corp., 471 U.S. at 472 n.14. But the

forum selection clause, which contemplates the possibility of a forum other than

Hong Kong, does not impact significantly whether a federal court in Iowa may

assume personal jurisdiction over LF Beauty. Similarly, the selection of Hong Kong

law would be a relevant, but not dispositive, factor in determining whether Creative

Calling established minimum contacts with Hong Kong, see Bell Paper Box, Inc. v.

Trans Western Polymers, Inc., 53 F.3d 920, 923 (8thCir. 1995), but the choice-of-law

clause does not make the exercise of jurisdiction in Iowa unreasonable. As we said

in Minnesota Mining &ManufacturingCo. v.NipponCarbide IndustriesCo., 63 F.3d

694 (8th Cir. 1995), “we must determine whether [the forum State] has jurisdiction

before we consider what law will be applied,” and a forum with jurisdiction often

must “apply the law of another State or country.” Id. at 698.

* * *

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For these reasons, we reverse the district court’s judgment dismissing the

action for lack of personal jurisdiction over LF Beauty, and remand the case for

further proceedings.

______________________________

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