Opinion ID: 2588382
Heading Depth: 1
Heading Rank: 6

Heading: General Jurisdiction Under K.S.A. 17-7307(c)

Text: When general jurisdiction is asserted and a corporate defendant has not consented to jurisdiction, due process requires continuous and systematic general business contacts to sustain a forum's exercise of jurisdiction. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); see Benton v. Cameco Corp., 375 F.3d 1070, 1080 (10th Cir.2004) (quoting OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 [10th Cir.1998]) (rejecting general jurisdiction where the defendant had two dozen spot market transactions over 8-year period and where defendant's wholly owned subsidiary was licensed to do business in state). This test of continuous and systematic general business contacts applies when general jurisdiction is asserted under K.S.A. 17-7307(c). See 4 Gard & Casad, Kansas Law and Practice, Kan. C. Civ. Proc. Annot. § 60-308, p. 424 (4th ed.2003) (doing business under K.S.A. 17-7307[c] requires ongoing, systematic activity and even if the statute purports to authorize jurisdiction, the constitutional due process requirements for general jurisdiction must be satisfied.) Consistent with this principle, the federal district court applying K.S.A. 17-7307(c) in Scharff v. CRST, Inc., 2002 WL 922131 (D. Kan. unpublished opinion filed May 2, 2002), considered whether the exercise of personal jurisdiction comported with due process requirements, including whether the defendants had contacts with the forum state [that were] so pervasive that personal jurisdiction is conferred by the `continuous and systematic' nature of the defendant's in-state activities and whether the exercise of personal jurisdiction offends traditional notions of fair play and substantial justice. Scharff, at -7. Two United States Supreme Court opinions have addressed what constitutes continuous and systematic contacts. In Perkins, 342 U.S. at 447-48, 72 S.Ct. 413, the Supreme Court held that a Philippine corporation had continuous and systematic contacts with Ohio where the corporation operated part of its general business out of Ohio and its president kept his wartime office in Ohio, kept company files there, held directors' meetings there, carried on corporate correspondence from his Ohio office, deposited corporate funds in two Ohio bank accounts, engaged an Ohio bank to act as the corporation's transfer agent, and supervised the rehabilitation of the corporation's Philippine properties from Ohio. Reaching the opposite holding in Helicopteros, 466 U.S. 408, 104 S.Ct. 1868, the Supreme Court found the defendant's contacts with Texas were insufficient to support general personal jurisdiction where the defendant had ventured to Texas to negotiate a contract, had purchased helicopters and related equipment from Texas vendors at regular intervals, and had sent prospective pilots and other personnel to Texas for training. Application of these two cases to different facts is less than clear. While the Supreme Court has refrained from stating factors to be applied in determining if contacts are continuous and systematic, other courts have attempted to do so. Often it is stated: In order for general jurisdiction to lie, a foreign corporation must have a substantial amount of contacts with the forum state. In assessing contacts with a forum, courts consider (1) whether the corporation solicits business in the state through a local office or agents; (2) whether the corporation sends agents into the state on a regular basis to solicit business; (3) the extent to which the corporation holds itself out as doing business in the forum state, through advertisements, listings or bank accounts; and (4) the volume of business conducted in the state by the corporation. 4 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure at § 1069, at 348-55 (2d ed.1987). Systems Material Handling Company v. Greenstein, 84 F.Supp.2d 1203, 1209 (D.Kan.2000). Applying these factors to Bayer Corporation, we conclude it had continuous and systematic contacts with Kansas by virtue of its Animal Health Division operating in Shawnee, Kansas, and its Crop Science Division operating in Stillwell, Kansas. However, the other defendants' contacts with Kansas in this case fall short of being the type of continuous and systematic contacts required to satisfy traditional notions of fair play and substantial justice. The plaintiff did not allege that any of the other defendants had a local office or agents in Kansas; sent agents to Kansas on a regular basis to solicit business from Goodyear or others; or held themselves out as doing business in Kansas through advertisements, listings, or bank accounts. While the volume of business the defendants conducted with Goodyear was financially substantial, all of the defendants' sales were to a single Kansas customer. See D.J.'s Rock Creek Marina, Inc. v. Imperial Foam and Insulation Mfg. Co., 2003 WL 262495 (D. Kan. unpublished opinion filed January 29, 2003) (finding no authority that contact with a forum consisting of a single customer constituted systematic and continuous contacts necessary to confer general jurisdiction; much more than single contact in the forum required, citing Morrison v. WCCO Belting, Inc., 35 F.Supp.2d 1293 [D. Kan.1999], which held a defendant lacked continuous and systematic contacts despite continuous sales in Kansas, making sales calls to Kansas customers, directly shipping products into Kansas, and having a Kansas-based sales representative). Thus, under the facts of this case, due process does not allow the exercise of general jurisdiction under K.S.A. 17-7307(c) as to any defendant except Bayer Corporation. Thus, we must consider the plaintiff's other arguments as to why jurisdiction can be asserted over Flexsys. ISSUE 3: Does the Kansas Long Arm Statute, K.S.A. 60-308(b), Provide a Basis for Specific Jurisdiction Over the Defendants? Alternatively, the plaintiff argues the Kansas long arm statute, K.S.A. 60-308(b), provides a statutory basis for asserting jurisdiction over the defendants under the theory that the price-fixing damages arose from actions by the defendants in Kansas. In Kansas, the long arm statute is construed liberally to assert jurisdiction over nonresident defendants to the full extent allowed by the Due Process Clause. Kluin v. American Suzuki Motor Corp., 274 Kan. 888, 893, 56 P.3d 829 (2002). The long arm statute provides, in pertinent part: (b) Any person, whether or not a citizen or resident of this state, who in person or through an agent or instrumentality does any of the acts hereinafter enumerated, thereby submits the person and, if an individual, the individual's personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of these acts: (1) Transaction of any business within this state; (2) commission of a tortious act within this state; . . . . (7) causing to persons or property within this state any injury arising out of an act or omission outside of this state by the defendant if, at the time of the injury either (A) the defendant was engaged in solicitation or service activities within this state; or (B) products, materials or things processed, serviced or manufactured by the defendant anywhere were used or consumed within this state in the ordinary course of trade or use. (Emphasis added.) K.S.A.2005 Supp. 60-308(b). The Court of Appeals concluded the plaintiff failed to establish specific jurisdiction under K.S.A. 60-308(b)(1) (transaction of business within the state) and (b)(7) (local injury from transaction outside the state). However, the Court of Appeals assumed that K.S.A. 60-308(b)(2) (tortious act within the state) would apply because antitrust violations are generally recognized to be torts. Merriman, slip op. at 7-8. Applying this provision, the plaintiff suggested to the Court of Appeals that specific jurisdiction could be acquired over the defendant who sold the chemicals which were used to manufacture the tires plaintiff purchased in Kansas at an inflated price. See Ling v. Jan's Liquors, 237 Kan. 629, 632-33, 703 P.2d 731 (1985) (K.S.A. 60-308[b][2] supports the exercise of personal jurisdiction where act occurs outside of the state but injury occurs in state; the `tortious act' is deemed to have occurred in the state where the injury occurs. 237 Kan. at 633, 703 P.2d 731). Once specific jurisdiction was acquired over one defendant, the plaintiff argued that, under a conspiracy theory of jurisdiction, jurisdiction exists over all of the defendants because each coconspirator is an agent or instrumentality of the other pursuant to K.S.A. 60-308(b) and the action of one coconspirator is considered to be the act of all. See Professional Investors Life Ins. Co. v. Roussel, 445 F.Supp. 687 (D.Kan.1978). The Court of Appeals accepted that the statutory basis for jurisdiction might be satisfied under this theory. But, the court ruled that the constitutional due process test was not met where the defendants merely placed a product into the stream of commerce and did not purposefully direct their products to serve the market in Kansas, citing Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 112, 94 L.Ed.2d 92, 107 S.Ct. 1026 (1987). Merriman, slip op. at 8. The first step of analysis is to determine if the Court of Appeals was correct in its analysis and application of the various provisions of the long arm statute. Because the Court of Appeals determined that K.S.A. 60-308(b)(2) was the only possible basis for jurisdiction, we will begin our analysis with that provision.