1 United States Court of Appeals

Fifth Circuit



## FILED

June 30, 2005

Charles R. Fulbruge III

Clerk IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

__________________________

No. 04-10297

__________________________

SHAWNE FIELDING; THOMAS BORER

Plaintiffs - Appellants,

versus

HUBERT BURDA MEDIA INC; ET AL

Defendants,

HUBERT BURDA MEDIA INC; HUBERT BURDA DIGITAL INC; BURDA

MEDIA INC; BURDA PUBLICAT IONS INC; BURDA ENTERTAINMENT

VERLAG GMBH; HUBERT BURDA, Individually; BERTELSMANN AG;

BERTELSMANN INC; GRUNER + JAH R AG; GRUNER+JAHR AG+CO KG;

STERN DE GMBH; TIP-VERLAG GMBH

Defendants - Appellees.

___________________________________________________

Appeal from the United States District Court

For the Northern District of Texas

___________________________________________________

Before JOLLY, DAVIS, and CLEMENT, Circuit Judges.

EDITH BROWN CLEMENT, Circuit Judge:

Thomas Borer, the for mer Swiss ambassador to Germany, and Shawne Fielding, his wife

(collectively, “appellants”), brought suit for libel, intentional inflict ion of emotional distress, torti ous

interference with prospective business relations, and civil conspiracy claims against appellees Hubert

Burda Media Holding GmbH & Co. KG (“Hubert Burda Media”), Bertelsmann AG (“Bertelsmann”),

and Gruner & Jahr (“Gruner”) and those parties’ related subsidiaries and affiliates. The district court

dismissed for lack of personal jurisdiction and denie d appellants’ motions for further jurisdictional2

discovery. Borer and Fielding filed this appeal. For the reasons that follow, we affirm the district

court’s holdi ng t hat none of appellees has sufficient contacts in Texas to satisfy due process

limitations on general or specific jurisdiction in the forum state.

I. FACTS AND PROCEEDINGS

Appellants Thomas Borer and Shawne Fielding were married in April 1999. Borer, a citizen

of Switzerland, was the Swiss Ambassador to Germany. Fielding, an American from Texas, is a

forme r mo del and one-time winner of both the Miss Dallas and Mrs. Texas competitions. Two

months after their marriage, Fielding and Borer moved into the Swiss Embassy in Berlin, where they

remained until April of 2002. The couple was active in public and social life in Berlin and often the

subject of media attention. During this time Fielding remained a citizen of Texas.

Appellee Hubert Burda Media owns Bunte

, a German-language news magazine with 97% of

its issues sold in Germany. Out of a total printing of 750,000 issues per week, Bunte ’s circulation

in Texas is limit

ed to approximately seventy issues per week—forty subscribers and thirty newsstand

distributors for resale. B unte is published weekly by Bunte Entertainment Verlag GmbH, a German

company with its principal office in Munich. Bunte Entertainment is a wholly owned subsidiary of

Hubert Burda Media, of which Hubert Burda, a German citizen, is Chairman of the Board. Hubert

Burda Media, Inc., a New York company with its prin cipal place of business in New York City,

provided research services to Bunte related to some of these articles.

Appellees Bertelsmann and Gruner own Stern

, a German-language news magazine with 94%

of its issues sold in Germany. Out of a total printing of approximately 1,000,000 issues per week,

Stern ’s circulation in Texas is limit ed to approximately sixty issues per week—forty subscribers and

twenty newsstand distributors for resale. S tern is published weekly by Gruner & Jahr AG & Co. KG,1 The story was also picked up by Hubert Burda Media-affiliated publications Neue Woche

and Viel Spass as well as the Bertelsmann-affiliated publication Tip . None of the parties alleges

that these publications are distributed in Texas. The analysis herein will address Stern and Tip

, appellants’ strongest cases for the exercise of jurisdiction.

3 a German company of which Gruner & Jahr AG is a two-percent owner. Gruner & Jahr AG is itself

a corporate division of Bertelsmann AG, a German corporation with its principal place of business

in Gütersloh, Germany. Bertelsmann, Inc., a Delaware corporation with its principal place of business

in New York City, is a wholly owned subsidiary of Bertelsmann AG.

On March 31, 2002, the Swiss tabloid Sonntags-Blick published an article alleging an extramarital affair between Borer and Djamila Rowe, a Europ ean mo del and perfume saleswoman at a

department store. The t ablo id is owned and published by Ringier AG, a non-party to these

proceedings. Rowe, who had provided explicit details about the alleged affair in the init ial article,

retracted her story approximately three months later, in early July 2002, and admitted that she had

been paid and pressured to fabricate the story of the affair with Borer. The reversal by Rowe led to

the resignations of the editor-in-chief and a writer for Sonntags-Blick

. The tabloid reached an out-ofcourt settlement with Bor er and Fielding and printed a front-page retraction under the headline,

“Sorry.”

Prior to the retraction, the story of the alleged affair was picked up by Hubert Burda Media’s

Bunte and Bertelsmann and Gruner’s Stern

. 1 Between April 11, 2002 and September 5, 2002, B unte

published seven articles relating to Fielding and Borer. The first article described the alleged affair

and cast Fielding in an unflatterin g light, describing her as a blond with “charm and sex appeal,” a

gold digger, and having ridden through the Swiss embassy on a horse, in a revealing cowgirl outfit.

The April 25, 2002 Bunte article included the most significant discussion of Fielding. It insinuated2 Fielding and Borer are vague about when and if they ever “lived” in Texas. Fielding

claims to now “reside” in Texas, but it is clear that she must mean this in some technical sense,

because she also states that “[w]hile living in Berlin . . . I continue[d] to be a resident of Dallas

and the State of Texas.” While it is undisputed that the couple owns land in Texas, Appellees

note an April 30, 2002 New York Times article which stated the appellants “will stay in Germany

where [Borer] will be a consultant.” Borer also gave a phone interview to the New York Times

“from his home in Potsdam” on July 14, 2002. Further, Fielding filed a Confirmation of

Termination of Residence form with the Mayor’s office in Potsdam on December 20, 2002, and

such confirmations are to be filed “within two weeks” of actual termination of residence. Thus,

contrary to appellants assertions, it seems that during virtually the entire time relevant to this

lawsuit, Fielding and Borer appear to have been residents of Germany. See Panda Brandyw ine

Corp. v. Potomac Elec. Pow er Co. , 253 F.3d 865, 869 (5th Cir. 2001) (“[T]he prima-facie-case

requirement does not require the court to credit conclusory allegations, even if uncontroverted.”).

4 that Fielding is accustomed to playing the role of wife to an unf ait hful husband, and included an

interview from her Texan ex-husband, Charlie Williams, who was described as abusive. This article

reports where she went to college and includes information from her college yearbook. Another

article from Bunte , from August 29, 2002, suggests that Fielding uses cocaine.

Between April 18, 2002 and March 20, 2003, Stern published five art icles relating to the

couple. On December 23, 2002, Stern gave Borer the dubious honor of “Affair of t he Year,”

repeating the allegation from April and describing Fielding and Borer as “social pariahs” in Berlin.

The article recounted the allegations of the affair and suggested that, despite subsequent denials by

all parties involved, it had occurred.

As public scrutiny of Borer and Fielding intensified, the co upl e suffered negative ramifications.

In April 2002, Borer was recalled to Switzerland and was stripped of his ambassadorship. Around

the same time, Fielding suffered a miscarriage. In late 2002, she was advised by doctors to return to

the less-stressful environment of Texas. 2 In addition to Borer’s professional setbacks and Fielding’s5

physical trauma, the couple alleges that they suffered injury to their reputati on amongst their family,

friends and acquaintances in Texas.

In April 2003, Fielding and Borer brought this suit in a Dallas County, Texas state district

court against defendants Hubert Burda Media, Bertelsmann, and Gruner for libel, intentional inflict ion

of emotional distress, torti ous interference with prospective business relations, and civil conspiracy

claims. Defendants removed this diversity action to the United States District Court for the Northern

District of Texas under 28 United States Code Section 1332(a)(3). On June 18, 2003, Plaintiffs filed

a m o tion for an extension to conduct additional jurisdictional discovery, which the district court

granted, allowing until September 5, 2003. Plaintiffs filed a motion for a second extension to conduct

furt her jurisdictional discovery and to amend their complaint. Defendants moved to quash these

motions to extend and to dismiss for lack o f perso nal jurisdiction under Federal Rule of Civil

Procedure 12(b)(2). The district court granted the defendants’ motions on February 11, 2004, and

Fielding and Borer now timely appeal.

II. DISCUSSION

The district court determined that it lacked specific jurisdiction over the defendants based on

the publication of the alleged libels in Texas and general jurisdiction over the companies based on

their contacts in the forum.

A. The district court lacked specific jurisdiction over each appellee.

1. Standard of Review

We review de novo the determination b y a district court of its lack of personal jurisdiction

over a defendant. Revell v. Lidov

, 317 F.3d 467, 469 (5th Cir. 2002). Plaintiffs bear the burden of

pro ving the district court’s personal jurisdiction, but relevant factual disputes will be resolved in6

plaint iffs’ favor. I

d .; Guidry v. U.S. Tobacco Co.

, 188 F.3d 619, 626 (5th Cir. 1999). Plaintiffs need

only plead a prima facie case for personal jurisdiction. Felch v. Transportes Lar-Mex S.A. De CV

,

92 F.3d 320, 326 (5th Cir. 1996). “Although jurisdictional allegations must be accepted as true, such

acceptance does not automatical ly mean that a p rima facie case for specific jurisdiction has been

presented.” P anda Brandywi ne Corp. v. Potomac Elec. Pow er Co. , 253 F.3d 865, 868 (5th Cir.

2001).

2. State of the Law

A federal district court hearing a case in diversity may exerci se personal jurisdiction to the

extent permitted for a court under applicable law of the state in which the federal court sits. A llred

v. Moore & Peterson , 117 F.3d 278, 281 (5th Cir. 1997). Texas’s jurisdictional statute is a “longarm” statute, extending the personal jurisdiction of Texas court to the extent al lowed by the Due

Process Clause of the Fourteenth Amendment, which “operates to limit the power of a State to assert

in personam jurisdiction over a nonresident defendant.” H elicopteros Nacionales de Colombia, S.A.

v. Hall

, 466 U.S. 408, 413–14 (1984); see also T EX

. C IV

. P RAC

. & R EM

. C ODE § 17.042 (Vernon

1997); Aviles v. Kunkle

, 978 F.2d 201, 204 (5th Cir. 1992). Due process in the exercise of personal

jurisdiction requires “minimum contacts with [the state] such that the maintenance of the suit does

not offend ‘traditional notions of fair play and substantial justice.’” I nt’l Shoe Co. v. Washington

,

326 U.S. 310, 316 (1945).

Specific jurisdiction for a suit alleging the intentional tort of libel exists for (1) a publication

with adequate circulation in the state, Keeton v. Hustler Magazine, I nc. , 465 U.S. 770, 773–74

(1984), or (2) an author or publisher who “aims” a story at the state knowing that the “effects” of the

story will be felt there. C alder v. Jones

, 465 U.S. 783, 789–90 (1984). Both K eeton and Calder7

involve publications with significant levels of circulation in the state where a plaint iff sought to bring

suit. K eeton

, 465 U. S. at 772 (between 10,000 to 15,000 copies of Hustler distributed to New

Hampshire per month); Calder

, 465 U.S. at 785 (600,000 copies out of a total circulation of 5 millio n

of the National Enquirer distributed to California per month). The Court concluded in Keeton that

jurisdiction was satisfied because that amount of circulation could not “be characterized as random,

isolated, or fortuitous.” 465 U.S. at 774.

While Keeton jurisdiction demands substantial circulation that is lacking here, C alder

jurisdiction requires a case-by-case analysis of the purpose and impact of the publication in question.

The Calder Court set forth an “effects” test that looked to the various impacts of the allegedly

libelous act:

The

. . . story concerned the California activities of a California resident. It impugned

the professionalism of an entertai ner whose television career was centered in

California. The article was drawn from California sources, and the brunt of the harm,

i n terms both of respondent's emotional distress and the injury to her professi onal

reputation, was suffered in California. In sum, California is the focal point both of the

stor y and o f the harm suffered. Jurisdiction over petitioners is therefore proper in

California based on the “effects” of their Florida conduct in California.

465 U.S. at 788–89. The Court held further that effects alone are insufficient to establish jurisdiction,

but that the defendants had directed their actions towards the forum, and knew their effects would

be felt there. I

d

. at 789–90. Our Circuit has underscored the importance of the direction o f

defendants’ action in the scheme of purposeful availment. S ee, e.g.

, Wien Air Alaska, Inc. v. Brandt

,

195 F.3d 208, 212 (5th Cir. 1999); Allred v. Moore & Peterson

, 117 F.3d 278, 286 (5th Cir. 1997).

Courts have extended specific jurisdiction under Calder over libel claims against publications

with far fewer contacts in the forum st ate than had the N

ational Enquirer in that case. S ee, e.g.

,

Gordy v. The Daily News

, 95 F.3d 829, 834–35 (9th Cir. 1996) (extending jurisdiction to paper with8

t hirt een daily and eighteen Sunday papers in forum). The D aily News and one of its columnists

allegedly lib eled Berry Gordy, the founder of Motown Records and his suit landed in California

federal court. The Ninth Circuit determined that the D aily News could reasonably anticipate being

haled into court in California based on Gordy’s undisputed presence in California, the Daily News ’s

regular and comprehensive contacts with the forum state, and its (albeit limited) distribution of its

publication in the state. I d

. at 833–35 (relying prim arily on Calder , 465 U.S. at 789–90).

Importantly, the Court observed that “[i]t is not clear why the distribution of 13 to 18 defamatory

copies of a column loses magnitude as a contact simply because the Daily News does a lot of other

things elsewhere.” I

d

. at 834 (discounting the relevance of defendants’ declaration that only .0017%

of its circulation was to the forum state).

This Court has held th at , t o exercise specific jurisdiction in a libel action, the “aim” of the

plaint iff under the Calder test must be demonstrated by showing that (1) the subject matter of and

(2) the sources relied upon for the article were in the forum state. Revell , 317 F.3d at 474 & n.48

(citing Reynolds v. Int’l Amateur Athletic Fed’n

, 23 F.3d 1110, 1120 (6th Cir. 1994)). In R evell

,

Oliver “Buck” Revell sued Hart G.W. Lidov in Texas after Lidov alleged on a Columbia University

website that Revell had some foreknowledge of the bombing of Pan Am Flight 103 in Scotland in

1988. I d

. at 469. After concluding that the “effects” were felt in the forum due to the plaintiff’s

presence in Texas, id

. at 473, the Court concluded that the allegations were inadequately “directed”

to Texas to satisfy minimum contacts under Calder

. I d

. at 475. The Court held that “the sources

relied upon and activities described in an allegedly defamatory publi cat io n should in some way

connect with the forum if Calder is to be invoked.” Id . at 474.

3. Personal Jurisdiction over Hubert Burda Media9

Hubert Burda Media argues that, even considering all of the acts of the Hubert Burda Mediaaffiliat ed organizations, the company has insufficient contacts with Texas to satisfy due process

limitations on pers o nal jurisdiction. Hubert Burda Media’s only publication with a demonstrated

physical circulation in Texas is Bunte , with a Texas distribution of seventy issues per week, out of

a total weekly printing of approximately 750,000 issues. This level of circulation does not to rise to

the “substantial number of copies

. . . regularly sold and distributed” requirement of Keeton

. 465 U.S.

at 781. Because Hubert Burda Media has insufficient circulation to satisfy jurisdiction under K eeton

,

its contacts must be analyzed in terms of the Calder effects test.

The clear focus of the seven Bunte articles was the alleged affair between Borer and Rowe

and it s aftermath, activities which occurred in Germany and Switzerland. The unflattering

descriptions, references to her college years and modeling career in Texas, and the interview with her

ex-husband served merely to supply background, biographical infor mat io n about Fielding. While

Hubert Burda Medi a ackno wledges the use of Texas sources in conducting its research for these

articles, the clear thrust of the articles, as merely echoing the affair allegations of the Swiss tabloid,

Sonntags Blick

, shows the marginal importance of this Texas research. Hubert Burda Media’s forum

contacts in the research process were limit ed to conducting interviews with Texas citizens, including

Fielding’s ex-husband, and hiring a contractor to purchase a copy of a college yearbook. These

fleeting contacts led to no new substantial disclosures and supplied little more than the biographical

backdrop for their story’s protagoni st. Unl i ke C alder where California was the focal point of the

defamatory story, Hubert Burda Media’s references to Texas were merely collateral to the focus of

the articles. 465 U.S. at 789.10

Looking to the effects caused by the allegedly libelous articles, it is clear that the arti cl es

conce rned the German activities of individuals in Germany. The series of articles impugned the

professionalism of a diplomat and his wife whose career s were centered in Europe, not Texas.

Neither Borer’s termination nor Fielding’s miscarriage occurred in Texas. The brunt of the harm, in

terms of appellants’ injury to their professional reputations and their emotional distress, was suffered

in Germany, not Texas. In sum, Germany is t he fo cal point both of the story and of the harm

suffered. Jurisdiction over Hubert Burda Media is therefore improper based on 1) the clear German

audience aim of this series of articles and 2) the primarily European effects which resulted.

Further, while the bulk of the effects need not be suffered i n t he forum to establish

jurisdiction, this Court noted in Revell that “knowledge of the particular forum in which a potential

plaint iff will bear the brunt of the harm forms an essential part of the Calder test.” Revell

, 317 F.3d

at 475. Knowledge that sufficient harm would be suffered in Texas is conspicuously lacking. In

addition to reporting German activities of German residents, the Bunte articles were directed at a

German audience, as demonstrated by the fact that all of the articles were published in the German

language, and 97% of the magazine’s issues were sold in Germany.

Moreover, the plaintiff's mere residence in the forum state is not sufficient to show that the

defendant had knowledge that effects would be felt there; a “more direct aim is required.” Revell

, 317

F.3d at 476. Here, Fielding and Borer have not even proven that they did, in fact, ever reside in

Texas during any of the time relevant to t his suit . Thus, Hubert Burda Media’s conduct and

connection with the forum was not such that it should have “reasonably anticipate[d] being haled into

court there.” Id. at 475.

4. Personal Jurisdiction over Bertelsmann and Gruner3 Fielding was Mrs. Texas.

11

Gruner, a Bertelsmann affiliat e, publishes Stern

, which printed an article recounting the affair

allegations in late December of 2002. Sixty copies of this publication were purposefully sent t o

readers in Texas. Although this article rehashed the tawdry allegations against Borer, its focus clearly

was on activity that occurred in Germany. In fact, the forum state is never mentioned, other than one

line noting that Fi elding was “Miss [sic] Texas.” 3 The articles did not discuss Fielding’s past (or

future) in Texas, nor did it contain any information that was available only from Tex as or Texas

sources.

Appellants argue that as a result of the articles, their reputations were destroyed amongst the

people in Texas who knew them, even though appellants neither lived in nor had careers in Texas

during the relevant time period. To employ this approach would turn the jurisdictional analysis on

its head, focusing attenti on not on where the alleged tortfeasor directed its activity, but on where the

victim could identify tangential harms. Such a flexible approach to the C alder eff ects test woul d

contravene “traditional notions of fair play.” I nt’l Shoe

, 326 U.S.at 316. An alleged tortfeasor must

have some control over the jurisdiction of his alleged tort, either through his intentional availment of

the economic benefits of the forum, as in Keeton

, 465 U.S. at 774–75, or through his direction of his

allegedly torti ous activities towards the forum, such that the impact of the injury on the plaint iff and

subsequent exercise of jurisdiction by the courts is reasonably anticipated, as in Calder

. 465 U.S. at

789–90.

5. Conclusion

Courts have held that the absence of significant circulation is unimportant where the plaint iff

can demonstrate that the brunt of the harm will occur in the f orum

. S ee Gordy

, 95 F.3d at 834.12

Here, Fielding and Borer have shown neither significant circulati on nor certain harm i n the forum

state. The brunt of the harm of the alleged libel was not suffered in Texas and the publishers did not

meaningfully direct their activities toward Texas. The district court correctly concluded that it lacked

specific jurisdiction.

B. The district court did not abuse its discretion by denying appellants’ request for additional

discovery.

1. Standard of Review

The discovery decisions of the trial judge are reviewed for abuse of discretion. W ichita Falls

Office Assocs. v. Banc One Corp.

, 978 F.2d 915, 918 (5th Cir. 1992). A district court’s discovery

decision will be reversed only if it is “arbitrary or clearly unreasonable,” Mayo v. Tri-Bell Indus., Inc.

,

787 F.2d 1007, 1012 (5th Cir. 1986), and t he appellant demonstrates prejudice resulting from the

decision. Hastings v. N. E. Indep. Sch. Dist. , 615 F.2d 628, 631 (5th Cir. 1980).

2. Analysis

Fielding appeals the district court’s decision to cut off discovery on the issue of “whether all

constituents of the massive Burda enterprise and the massive Bertelsmann enterprise, assuming each

constituent was a separate entity, were subject to the District Court’s specific and general jurisdiction

under the single business ent erprise and alter ego theories of jurisdiction.” Because we conclude

above, as did the district court, that the district court lacks specific jurisdiction over any of the parties,

the specific jurisdiction aspect of this argument will not be addressed. The remaining issue is whether

further jurisdictional discovery could demonstrate that a Texas court’s general jurisdiction over some

subsidia ry or division of the defendant corporations might extend jurisdiction to the company as a

whole.13

A district court may exercise general jurisdiction over an out-of-state corporati on under the

single business enterprise doctrine when a subsidiary of the out-of-state corporati on is subject to the

court’s general jurisdiction. E l Pue rto De Liverpool v. Servi Mundo Llantero S.A. De C.V. , 82

S.W.3d 622, 636 (Tex.App.-Corpus Christi 2002, pet. dism’d w.o.j.) (“[J]urisdiction in Texas can

be affirmed on the single business enterprise theory.”). Typically used in the context of liability, the

doctrine applies “when corporati ons are not operated as separate entities, but integrate their resources

to achieve a common business purpose.” G ardemal v. Westin Hotel Co.

, 186 F.3d 588, 594 (5th Cir.

1999). The Court analyzes a number of factors to determine whether a single business enterprise is

present. See El Puerto , 82 S.W.3d at 637.

The district court determined that appellants’ only evidence relevant to extending the district

court’s general juris dict io n was that Bertelsmann Media Group (“BMG”), a subsidiary of

Bertelsmann, Inc., has a registered agent capable of receiving process in Texas. Appellants do not

contest the declaration of Jacqueline C hasey, the Senior Vice President for Legal Affairs at

Bertelsmann, Inc., which asserts that Bertelsmann, Inc. has no “s ubstantial, continuous, and

systematic contacts with the State of Texas.” Because t he registration of an agent for receipt of

process does not establish general jurisdiction, see, e.g.

, Wenche Seimer v. Learjet Acquisition Corp.

,

966 F.2d 179, 181–82 (5th Cir. 1992), appellants have not shown how any further inquiry into the

relationship between BMG and Bertelsmann, Inc. would impact the district court’s jurisdict io nal

determination.

Appellants sought further discovery to determine whether the court could exercise general

jurisdiction through the single business enterprise doctrine over B ertelsmann, Inc. due to general

jurisdiction over BMG. Because they failed to argue that the district court would have general14

jurisdiction over BMG, appellants cannot show that they were prejudiced by th e district court’s

refusal to allow them to pursue the discovery. Moreover, appellants have not made even a

preliminary showing of jurisdiction. T oys “R” Us, Inc. v. Step Two, S.A.

, 318 F.3d 446, 456 (3d Cir.,

2003) (“If a plaint iff presents factual allegations that suggest with reasonable particularity the possible

existence of the requisite contacts . . . the plaintiff's right to conduct jurisdictional discovery should

be sustained.”) (internal quotati ons and citation omitted). The di stri ct court did not abuse i ts

discretion.

III. CONCLUSION

For the foregoing reasons, the decision of the district court is AFFIRMED.