Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-arwd-6_05-cv-06022/USCOURTS-arwd-6_05-cv-06022-0/pdf.json

Parties Involved:
Kobe Steel, Ltd.
Defendant
PRM Energy Systems, Inc.
Plaintiff

Document Text:

IN THE UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF ARKANSAS

HOT SPRINGS DIVISION

PRM ENERGY SYSTEMS, INC. PLAINTIFF

v. Civil No. 05-6022

KOBE STEEL, LTD. DEFENDANT

O R D E R

Now on this 15th day of November, 2005, come on for

consideration the following motions:

* Kobe Steel, Ltd.’s Motion To Dismiss Plaintiff’s

Complaint (document #7);

* plaintiff’s Motion For Leave To File First Amended

Complaint (document #14); and

* Kobe Steel, Ltd.’s Renewal Of Motion To Dismiss

Plaintiff’s Complaint (document #22), 

and from said motions, the supporting documentation, and the

responses thereto, the Court finds and orders as follows:

1. In this diversity case, plaintiff PRM Energy Systems,

Inc. (“PRM”) alleges that defendant Kobe Steel, Ltd. (“Kobe”) is

liable to it for tortious interference with contract and for civil

conspiracy. Kobe has moved to dismiss the Complaint, alleging

insufficiency of service, lack of personal jurisdiction, and

failure to state a claim upon which relief can be granted. PRM,

for its part, has moved for leave to shore up its Complaint, and

opposes the dismissal.

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2. The Court turns first to the issue of service of

process. PRM initially attempted service of process on March 25,

2005, by delivering a copy of the Summons and Complaint to an

employee of Kobe who was in Little Rock, Arkansas, to testify at

an arbitration. PRM then, on the same day that Kobe filed its

first motion to dismiss, sought leave of Court to utilize the

services of Crowe Foreign Services to serve Kobe pursuant to the

Hague Convention on the Service Abroad of Judicial and

Extrajudicial Documents, as provided in F.R.C.P. 4(f). An Order

allowing such service was entered on May 31, 2005, and PRM was

also given additional time to perfect service and respond to the

motion to dismiss.

On October 25, 2005, PRM filed a Notice Of Service, stating

that service had been perfected in accordance with the Hague

Convention as of August 24, 2005, and that a translation of the

Certificate/Attestation of such service would be filed immediately

upon receipt. That translation was filed on October 27, 2005,

showing that Kobe was served with process according to the

requirements of the Hague Convention on August 24, 2005, by mail

received by Reiko Ikeda, an employee of Kobe. 

In its second motion to dismiss, filed on September 13, 2005,

Kobe notes that “[o]n August 24, 2005, Plaintiff caused to be

delivered to Kobe a copy of the Complaint,” and that it

“specifically denies that Plaintiff has obtained effective service

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of process. . . .” No reason is given for this denial, however,

and the service of process appears to the Court to be in order.

The Court, therefore, finds that service of process on Kobe has

been perfected.

3. Prefatory to its disposition of the other issues, the

Court will next address PRM’s motion for leave to amend its

Complaint to add information it learned after the Complaint was

filed. Leave to amend should be freely given when justice so

requires. F.R.C.P. 15(a). The Court will, therefore, allow PRM to

file its Proposed Amended Complaint, and as a result, will examine

the arguments made by Kobe in support of dismissal in light of the

proposed First Amended Complaint.

4. Kobe next contends that the Court lacks personal

jurisdiction over it. While PRM has the burden of proving that

the Court has personal jurisdiction over Kobe, to defeat Kobe’s

motion it need only make a prima facie showing of jurisdiction.

Where, as here, the Court relies on pleadings and affidavits,

rather than an evidentiary hearing, to resolve the issue, it must

look at the facts in the light most favorable to PRM, and resolve

all factual conflicts in favor of PRM. Dakota Industries, Inc. v.

Dakota Sportswear, Inc., 946 F.2d 1384 (8th Cir. 1991). 

The Eighth Circuit has had many opportunities to review the

requirements of personal jurisdiction in a diversity case such as

the one at bar. The relevant principles may be quoted from one

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such case, Burlington Industries, Inc. v. Maples Industries, Inc.,

97 F.3d 1100 (8th Cir. 1996), as follows:

In a diversity action, a federal court may assume

jurisdiction over nonresident defendants only to the

extent permitted by the long-arm statute of the forum

state, and by the due process clause of the Fourteenth

Amendment. We have previously recognized that the

Arkansas long-arm statute authorizes jurisdiction over

foreign corporations to the fullest extent allowed by

constitutional due process.

Due process requires "minimum contacts" between the nonresident defendant and the forum state such that

"maintenance of the suit does not offend traditional

notions of fair play and substantial justice. The

defendant's conduct and connection with the forum state

must be such that defendant should "reasonably

anticipate being haled into court there."

Specific jurisdiction refers to jurisdiction over causes

of action arising from or related to a defendant's

actions within the forum state while general

jurisdiction refers to the power of a state to

adjudicate any cause of action involving a particular

defendant, regardless of where the cause of action

arose. 

Where specific personal jurisdiction over a non-resident

is asserted, due process is satisfied if the defendant

has purposely directed its activities at forum

residents, and the litigation results from injuries

arising out of, or relating to, those activities.

(Internal citations omitted.)

Burlington sets out five factors to be considered in

evaluating a challenge to personal jurisdiction:

* the nature and quality of defendant's contacts with

Arkansas;

* the quantity of defendant's contacts with Arkansas;

* the relationship between defendant's contacts with

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Arkansas and the cause of action asserted against it;

* the interests of Arkansas in providing a forum for

plaintiff to resolve its dispute with defendant; and

* the convenience of the parties.

The first three of these factors are the most important, with

the last two being of lesser importance.

5. In support of its contention that the Court lacks

personal jurisdiction over it, Kobe submits the Declaration of

Masahiro Motoyuki, Manager of the Iron Unit Division of Kobe, made

pursuant to 28 U.S.C. §1746. Motoyuki avers the following with

regard to Kobe’s contacts with the State of Arkansas:

* that Kobe is not qualified or registered to do business

in the State of Arkansas, and does not regularly

transact business here;

* that Kobe does not have an interest in or use any real

property in Arkansas;

* that in the past ten years, Kobe’s sales to Arkansas

have amounted to less than 0.01 per cent of its annual

revenues, and comprise “shipments of samples, a coating

machine . . ., spare parts and maintenance services to

two Arkansas companies,” neither of which is involved in

this lawsuit;

* that Kobe has never derived substantial revenue from

goods used or consumed in Arkansas;

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* that Kobe representatives do not generally travel to

Arkansas in its regular course of business;

* that Kobe does not have an office, a telephone listing,

a bank account, or any employees in Arkansas;

* that starting with a telephone call from its London

office to PRM’s Arkansas office on February 14, 2002, it

engaged in discussions with PRM about a potential

business transaction involving the licensing of PRM’s

gasification technology; 

* that between February, 2002, and October, 2004, there

were approximately 20 e-mails and 5 phone calls between

Kobe in Japan and PRM in Arkansas relating to the

transaction;

* that in May, 2002, two Kobe representatives traveled to

Arkansas to investigate certain gasification technology,

and while here, “toured two commercial gasification

plants and investigated the technology”; and

* that ultimately, Kobe and PRM did not enter into the

license agreement contemplated by the business

transaction.

PRM does not dispute the number and type of contacts Kobe

admits to having had with the State of Arkansas. However, in

addition to those admitted contacts, PRM offers the deposition

testimony of Tsuyoshi Uesugi, who is in charge of marketing

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PRM suggests, in its brief, that Kobe’s motions to dismiss have been converted 1

into motions for summary judgment by the submission of evidence in support of the

personal jurisdiction issue. F.R.C.P. 12(b) provides that “[i]f, on a motion asserting

the defense numbered (6) to dismiss for failure of the pleading to state a claim upon

which relief can be granted, matters outside the pleading are presented to and not

excluded by the court, the motion shall be treated as one for summary judgment. . . .”

That rule does not apply to motions asserting the defense of lack of jurisdiction over

the person, set forth at F.R.C.P. 12(b)(2). See, e.g., Stevens v. Redwing, 146 F.3d 538

(8th Cir. 1998).

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energy-related technology for Kobe. Giving the testimony of 1

Uesugi the inferences most favorable to PRM, it could be concluded

that Kobe’s representatives traveled to Arkansas to investigate

the gasification technology, and that Kobe, desiring to obtain the

technology on terms more advantageous than those offered by PRM,

became involved with one of PRM’s licensees, Primenergy, L.L.C.,

in a scheme to avoid the contractual relationship between PRM and

Primenergy.

6. The Court has no hesitancy in finding that it lacks

general personal jurisdiction over Kobe, and in fact, PRM does not

appear to seriously contend that this Court has such jurisdiction.

PRM’s contentions are focused, instead, on the issue of specific

jurisdiction, which it argues exists under the reasoning of Calder

v. Jones, 465 U.S. 783 (1984). In that case, the Supreme Court

held that a California court had personal jurisdiction over

Florida residents alleged to have committed an intentional tort

against a California resident, the effects of which were felt in

California. 

The principles behind Calder have been used to justify the

exercise of specific personal jurisdiction over defendants who

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have never entered the forum state, Oriental Trading Co. v.

Firetti, 236 F.3d 938 (8th Cir. 2001), and the Court finds those

principles applicable here. Kobe admits that in addition to a

series of e-mails and telephone calls related to the prospective

licensing transaction, two of its representatives came to Arkansas

for the purpose of investigating PRM’s gasification technology.

While a jury may ultimately find that this visit -- and all of

Kobe’s subsequent activities -- were completely legitimate, that

is not the Court’s prerogative in resolving the pending motion.

When the evidence is given the inferences most favorable to PRM,

the Court concludes that, although the number of Kobe’s contacts

with Arkansas is relatively small, the nature and quality of those

contacts are such that it can be said that Kobe purposely directed

its activities at PRM, a forum resident. The allegations of the

proposed First Amended Complaint are such that it can also be said

that this litigation results from alleged injuries said to arise

out of and relate to those contacts. Certainly the State of

Arkansas has an interest in providing a forum for its resident,

PRM, to resolve its dispute with Kobe. Thus, the first four of

the Burlington factors militate a finding of personal jurisdiction

over Kobe. Nothing is contended as to the convenience of either

party, and this factor can be given no weight in the Court’s

analysis. The Court, therefore, finds that it has specific

personal jurisdiction over Kobe for the purpose of resolving the

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claims of intentional torts asserted by PRM.

7. Kobe’s last contention is that the Complaint should be

dismissed for failure to state a claim upon which relief can be

granted, pursuant to F.R.C.P. 12(b)(6). It is axiomatic that a

complaint should not be dismissed on this basis unless it “appears

beyond doubt that the plaintiff can prove no set of facts in

support of his claim that would entitle him to relief,” and that

the complaint must be viewed in the light most favorable to

plaintiff. Krentz v. Robertson Fire Protection District, 228 F.3d

897 (8th Cir. 2000). Under the notice pleading standard of

F.R.C.P. 8(a), “a complaint must include only ‘a short and plain

statement of the claim showing that the pleader is entitled to

relief.’ Such a statement must simply ‘give the defendant fair

notice of what the plaintiff’s claim is and the grounds upon which

it rests’.” Swierkiewicz v. Sorema N.A., 534 U.S. 506 (2002).

The claims asserted by PRM against Kobe are tortious

interference with contract and civil conspiracy. In order to

state a claim for tortious interference as against Kobe, PRM’s

pleading must put Kobe on notice that it claims the following:

* that PRM had a valid contract with Primenergy;

* that Kobe knew of PRM’s contract with Primenergy;

* that Kobe intentionally interfered, causing a breach of

PRM’s contract with Primenergy; and

* that this breach damaged PRM.

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Stewart Title Guaranty Co. v. American Abstract & Title Co., ---

Ark. ---, --- S.W.3d ---, 2005 WL 2562946 (2005).

In order to state a claim for civil conspiracy, PRM’s

pleading must put Kobe on notice that it claims the following:

* that Kobe and Primenergy (or the principals of

Primenergy) worked together to accomplish a purpose that

is unlawful or oppressive, or to use unlawful or

oppressive means to bring about injury to PRM; and

* that Kobe had a specific intent to accomplish the

contemplated wrong.

Allen v. Allison, 356 Ark. 403, 155 S.W.3d 682 (2004).

The allegations in the proposed First Amended Complaint are

sufficient to put Kobe on notice that PRM claims the following:

* that it had a valid contract with Primenergy; 

* that Kobe knew of PRM’s contract with Primenergy; 

* that Kobe knew Primenergy’s contract with PRM did not

include selling the gasification technology in Japan;

* that Kobe wanted Primenergy to breach its contract with

PRM by selling to Kobe in Japan because Kobe expected to

obtain the gasification technology from Primenergy on

better terms than PRM was offering; 

* that Kobe wanted to influence contract negotiations

between PRM and Primenergy in order to obtain the

gasification technology on better terms than PRM was

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offering; 

* that ultimately the conduct of Kobe, in conjunction with

the conduct of Primenergy (or its principals) was such

that the relationship between PRM and Primenergy was

destroyed; and 

* that PRM sustained damages thereby. 

The Court believes that these allegations suffice to give

Kobe notice of what PRM’s claims are, and the grounds upon which

they rest, and that the proposed First Amended Complaint is not

susceptible of dismissal for failure to state a claim.

IT IS THEREFORE ORDERED that Kobe Steel, Ltd.’s Motion To

Dismiss Plaintiff’s Complaint (document #7) and Kobe Steel, Ltd.’s

Renewal Of Motion To Dismiss Plaintiff’s Complaint (document #22)

are denied.

IT IS FURTHER ORDERED that plaintiff’s Motion For Leave To

File First Amended Complaint (document #14) is granted.

IT IS SO ORDERED.

 /s/ Jimm Larry Hendren 

JIMM LARRY HENDREN

UNITED STATES DISTRICT JUDGE

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