Opinion ID: 2499988
Heading Depth: 1
Heading Rank: 2

Heading: standard before the district court and the standard of review

Text: Before discussing the substance of the parties' arguments, we must determine the standard or test that controlled the district court's determination of whether Kansas could exercise personal jurisdiction over TIC. This determination requires us to decide which party had the burden of persuasion and the nature of that burden. Then, we must determine the standard that applies to our review of the district court's determination of whether that standard or test was met. The parties seem to agree that the standard or test may vary, depending on the procedural posture of the motion, that is whether the motion is considered before discovery, after discovery, or after an evidentiary hearing. There is very little discussion of these various procedures in Kansas law or of the standard or test to be applied in each situation. K.S.A. 2011 Supp. 60-212(b)(2), the provision under which TIC's motion was filed, provides no assistance. It does not indicate whether the decision is limited to the pleadings or whether matters outside the pleadings may be considered and, if so, what standard applies. Another portion of the statute, K.S.A. 2011 Supp. 60-212(d), applies to some motions to dismiss where matters outside the pleadings are considered, but its application is limited to motions filed pursuant to K.S.A. 2011 Supp. 60-212(b)(6) (failure to state a claim upon which relief can be granted) or K.S.A. 2011 Supp. 60-212(c) (motion for judgment on the pleadings). TIC's motion pursuant to K.S.A. 2011 Supp. 60-212(b)(2) is not included. Kansas' statute is not unique in this regard. In fact, Kansas' statute is patterned after Rule 12 of the Federal Rules of Civil Procedure. Without direct guidance in Rule 12(b)(2), federal courts have defined procedures and the applicable standards for considering motions to dismiss for lack of personal jurisdiction. We turn to these federal decisions for persuasive guidance, as we have on other occasions when considering issues relating to civil procedure. See Back-Wenzel v. Williams, 279 Kan. 346, 349, 109 P.3d 1194 (2005). Many federal cases, including decisions of the United States Supreme Court, have recognized that federal district courts have wide discretion in determining the most appropriate mechanism for resolving a motion to dismiss for lack of personal jurisdiction. See Catholic Conf. v. Abortion Rights Mobilization, 487 U.S. 72, 79, 108 S.Ct. 2268, 101 L.Ed.2d 69 (1988) (recognizing a court's inherent and legitimate authority to issue orders of discovery and other orders as necessary for the court to determine jurisdiction); Oppenheimer Fund, Inc. v. Sanders, 437 U.S. 340, 351 n. 13, 98 S.Ct. 2380, 57 L.Ed.2d 253 (1978) (where issues arise as to jurisdiction or venue, discovery is available to ascertain the facts bearing on such issues); Gibbs v. Buck, 307 U.S. 66, 71-72, 59 S.Ct. 725, 83 L.Ed. 1111 (1939) (As there is no statutory direction for procedure upon an issue of jurisdiction, the mode of its determination is left to the trial court.); see also 5B Wright & Miller, Federal Practice and Procedure: Civil § 1351 (3d ed. 2004) (5B Wright, § 1351), p. 305 (When a federal court is considering a challenge to its jurisdiction over a defendant or over some form of property, the district judge has considerable procedural leeway in choosing a methodology for deciding the motion.). Exercising this discretion, the district court may choose from several procedures for handling a motion to dismiss. Before trial, the district court may determine the outcome based on the pleadings; `on the basis of affidavits alone; or it may permit discovery in aid of the motion; or it may conduct an evidentiary hearing on the merits of the motion.' [Citation omitted.] Serras v. First Tennessee Bank Nat. Ass'n, 875 F.2d 1212, 1214 (6th Cir.1989); see 5B Wright, § 1351, pp. 305 & 308-09. Additionally, rather than make a pretrial determination, the court may await the trial on the merits with the fact issues being left to the jury for determination. 5B Wright, § 1351, pp. 308-09. Indeed, the United States Supreme Court has indicated that the determination should be deferred until trial if the issue of jurisdiction is dependent upon a decision on the merits. Land v. Dollar, 330 U.S. 731, 735, 67 S.Ct. 1009, 91 L.Ed. 1209 (1947). As the Tenth Circuit Court of Appeals has explained, [t]he purpose of postponing a determination upon a jurisdictional question when it is tied to the actual merits of the case is to prevent a summary decision on the merits without the ordinary incidents of a trial including the right to jury. [Citations omitted.] Schramm v. Oakes, 352 F.2d 143, 149 (10th Cir.1965). We hold that these same principles apply in Kansas. In this case, the district court chose to make a pretrial determination after discovery and supplementation of the record with written evidence and affidavits. TIC suggests in that procedural circumstance a plaintiff must establish the requirements for personal jurisdiction by a preponderance of the evidence. Further, it argues, if discovered evidence is presented to the district court, the court can weigh conflicting evidence and make factual findings related to jurisdiction. Finally, TIC argues that because the district court made findings based on such discovery evidence, regardless of the fact that information consisted of written materials, this court should give deference to those findings and examine whether the district court's factual findings were supported by substantial competent evidence. To support its arguments, TIC cites cases from other jurisdictions. See, e.g., Shapiro, Lifschitz & Schram, P.C. v. Hazard, 24 F.Supp.2d 66, 70 (D.D.C.1998) ([I]n situations where the parties are permitted to conduct discovery on the jurisdictional issue a plaintiff must prove personal jurisdiction by a preponderance of the evidence.); see also Jung v. Association of American Medical Colleges, 300 F.Supp.2d 119, 128 (D.D.C. 2004) (quoting Hazard, 24 F.Supp.2d at 70); In re Vitamins Antitrust Litigation, 270 F.Supp.2d 15, 20 (D.D.C.2003) ([p]laintiffs must establish personal jurisdiction . . . by a preponderance of the evidence); BBA Aviation PLC v. Superior Court, 190 Cal.App.4th 421, 429, 117 Cal.Rptr.3d 914 (2010) (If the jurisdictional facts are conflicting, we review the lower court's factual determinations for substantial evidence, but still review its legal conclusions de novo.); State ex rel. Cooper v. Ridgeway Brands Mfg., LLC, 188 N.C.App. 302, 304, 655 S.E.2d 446 (2008) (Where district court denies motion to dismiss for lack of personal jurisdiction and makes findings of fact, review is limited to whether the . . . court's findings of fact are supported by competent evidence in the record and whether the conclusions of law are supported by the findings of fact.). Aeroflex, on the other hand, argues it only needed to present a prima facie case and the district court should have considered the record in the light most favorable to Aeroflex in resolving the motion. To support this argument, Aeroflex cites federal cases, cases from other states, and decisions of this court that apply this standard. The various federal cases on which Aeroflex relies represent [t]he most common formulation found in the [federal] judicial opinions, which is that the plaintiff needs only make a prima facie showing when the district judge restricts her review of the Rule 12(b)(2) motion solely to affidavits and other written evidence. 5B Wright, § 1351, pp. 275 & 286-88. In other words, the authority cited by TIC is a minority view. Further, the rationale of the minority line of cases has been criticized. For example, Hazard, Jung, and In re Vitamins Litigation have been called into question because the analysis relied on a Second Circuit Court of Appeals decision that has subsequently been clarified. See Heller v. Nicholas Applegate Capital Management, 498 F.Supp.2d 100, 107-08 (D.D.C.2007) (citing In re Baan Co. Securities Litigation, 245 F.Supp.2d 117, 124-25 [D.D.C.2003]) (criticizing Hazard line of cases and, after discussing caselaw from other circuits, adopting `factually documented' prima facie standard). In the clarifying opinion, the Second Circuit held that the preponderance standard applies only if the district court has already held an evidentiary hearing. Metropolitan Life Ins. Co. v. Robertson-Ceco Corp., 84 F.3d 560, 567 (2d Cir.1996). The Second Circuit's holding in Metropolitan Life Ins. Co. is consistent with most other federal cases. As one court stated, it is only when the court conducts an evidentiary hearing to determine disputed issues of fact and weighs credibility that the burden quite properly increases to the same standard that would obtain if the matter were deferred to trial: the preponderance of the evidence. Serras, 875 F.2d at 1214; see 5B Wright, § 1351, p. 287. Under these cases, the fact that discovery has been conducted relating to jurisdiction does not determine the burden; the determining factor is whether there has been an evidentiary hearing. See 5B Wright, § 1351. If we apply these federal cases, Aeroflex has the burden to establish a prima facie case of jurisdiction. [F]or purposes of such a review, federal courts will, as they do on other motions under Rule 12(b), take as true the allegations of the nonmoving party with regard to the jurisdictional issues and resolve all factual disputes in his or her favor. 5B Wright, § 1351, pp. 288 & 299. Several states have adopted the same approach. See, e.g., Planning Group v. Lake Mathews Mineral, 226 Ariz. 262, 264 n. 1, 246 P.3d 343 (2011) (stating when there is no evidentiary hearing regarding lack of personal jurisdiction, appellate court reviews district court's decision and factual findings de novo, viewing facts in light most favorable to plaintiff but accepting as true uncontroverted facts put forward by defendant); Home Depot Supply v. Hunter Management, LLC, 289 Ga.App. 286, 286, 656 S.E.2d 898 (2008) (where motion decided without evidentiary hearing and based solely upon the written submissions of the parties, any disputes of fact must be resolved in the light most favorable to the party asserting the existence of personal jurisdiction, and appellate court exercises de novo review); Evans v. State, 908 N.E.2d 1254, 1256 (Ind.App.2009) (`The standard of appellate review of rulings on motions to dismiss on jurisdictional grounds depends on whether the trial court resolved disputed facts, and if so, whether the trial court conducted an evidentiary hearing or ruled on a paper record.' . . . Here, the trial court's decision is based on a paper record. Thus, our review is de novo.). This multistate view is consistent with the decisions of this court. Although this court has not specifically outlined the procedures available to a district court for resolution of a motion to dismiss for lack of personal jurisdiction and has not addressed whether the burden of persuasion varies depending on the procedure, this court has stated: Whether jurisdiction exists is a question of law. [Citation omitted.] The plaintiff bears the burden of establishing personal jurisdiction over the defendants. Where, as here, the issue of personal jurisdiction is decided pretrial on the basis of the pleadings, affidavits, and other written materials, any factual disputes must be resolved in the plaintiff's favor and the plaintiff need only make a prima facie showing of jurisdiction.  (Emphasis added.) Merriman v. Crompton Corp., 282 Kan. 433, 439, 146 P.3d 162 (2006). In earlier cases, we have also held that `when a motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing.' In re Hesston Corp., 254 Kan. 941, 954, 870 P.2d 17 (1994). This standard is not only consistent with the common approach in federal courts and in the courts of other states, it is consistent with this court's caselaw in contexts other than personal jurisdiction. We have generally applied a preponderance of the evidence standard where the district court has the power to weigh and evaluate the evidence in the same manner as if it were adjudicating the case on the merits and making findings of fact based on a weighing of the credibility of the evidence. See In re Estate of Ewers, 206 Kan. 623, 626, 481 P.2d 970 (1971). In contrast, when presented with affidavits, the parties do not have the ability to test evidence through cross-examination, and the district court does not have the opportunity to judge credibility and does not take on the role of factfinder. Generally, [i]n determining whether a prima facie showing has been made, the district court is not acting as a factfinder. Boit v. Gar-Tec Products, Inc., 967 F.2d 671, 675 (1st Cir.1992); see also Estate of Draper v. Bank of America, 288 Kan. 510, 517, 205 P.3d 698 (2009) (recognizing general rule that appellate court construes written documents de novo and without regard to district court's ruling); Cranford v. State, 39 Kan.App.2d 12, 18, 176 P.3d 972, rev. denied 286 Kan. 1176 (2008) (Malone, J., concurring) (questioning ability to review for substantial competent evidence when the preliminary hearing is nonevidentiary and advocating de novo review). Further, the view that the evidence must be considered in the light most favorable to the plaintiff (the nonmovant) is consistent with the standard applied to motions filed under K.S.A. 2011 Supp. 60-212(b)(6) where matters outside the pleadings are considered. K.S.A. 2011 Supp. 60-212(d) (summary judgment standard applies); see Thomas v. Shawnee County Comm'rs, 293 Kan. 208, 227, 262 P.3d 336 (2011) (when considering summary judgment motion, district judge must consider evidence in light most favorable to nonmoving party); Wachter Management Co. v. Dexter & Chaney, Inc., 282 Kan. 365, 368, 144 P.3d 747 (2006) (K.S.A. 60-212[b][3] motion regarding venue); Kluin v. American Suzuki Motor Corp., 274 Kan. 888, 893, 56 P.3d 829 (2002) (K.S.A. 60-212[b][2] motion regarding personal jurisdiction); see also Behagen v. Amateur Basketball Ass'n of U.S.A., 744 F.2d 731, 733 (10th Cir.1984), cert. denied 471 U.S. 1010, 105 S.Ct. 1879, 85 L.Ed.2d 171 (1985) (if the parties present conflicting affidavits, the court resolves all factual disputes in plaintiff's favor; plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by defendant); Environmental Ventures, Inc. v. Alda Services Corp., 19 Kan.App.2d 292, 295, 868 P.2d 540 (1994) (The court may consider affidavits and documentary evidence in determining whether such a showing has been made but must give the plaintiff the benefit of all factual doubt.). Hence, we reject TIC's arguments and conclude that, even though there was discovery, when a defendant's K.S.A. 2011 Supp. 60-212(b)(2) motion to dismiss for lack of personal jurisdiction is decided before trial on the basis of the pleadings, affidavits, and other written materials and without an evidentiary hearing, any factual disputes must be resolved in the plaintiff's favor and the plaintiff need only make a prima facie showing of jurisdiction. Next, TIC argues Aeroflex cannot rely on allegations in the petition to meet this burden. It suggests that because there has been discovery, Aeroflex must present some evidence on every point required to establish the basis for jurisdiction over TIC. This position is not consistent with our decision in In re Hesston, where we stated: `The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits. If the parties present conflicting affidavits, all factual disputes are resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party.' [Citations omitted.] In re Hesston, 254 Kan. at 954, 870 P.2d 17 (quoting Rambo v. American Southern Ins. Co., 839 F.2d 1415, 1417 [10th Cir. 1988]). Applying this procedure, the district court could consider the allegations in Aeroflex's petition unless TIC controverts the allegation with an affidavit or other evidence. If TIC controverts the allegation, Aeroflex must come forward with some evidence in rebuttal. Then, the district court considers the evidence in the light most favorable to Aeroflex rather than weighing conflicting evidence. If a district court's decision regarding a K.S.A. 2011 Supp. 60-212(b)(2) motion to dismiss for lack of personal jurisdiction is appealed, an appellate court reviews the district court's determination under a de novo standard. See Merriman, 282 Kan. at 439, 146 P.3d 162; Kluin, 274 Kan. at 893, 56 P.3d 829; In re Hesston, 254 Kan. at 954-55, 870 P.2d 17; see also 5B Wright, § 1351, p. 314 ([A] district court's dismissal on jurisdictional grounds is reviewed de novo by the court of appeals for errors of law and with regard to the facts if the district court relied solely upon the pleadings and affidavits.). Here, although the district court stated Aeroflex needed only make a prima facie showing, it did not indicate that it considered the facts in the light most favorable to Aeroflex. In fact, the court's findings reflect that it weighed and found persuasive the facts contrary to Aeroflex's position. For example, the district court relied on the fact the U.S. Army's investigative report rejected the plaintiff's claim. Yet, there is no suggestion that determination has any preclusive effect; it is just evidence. Recognizing we might conclude the district court weighed evidence, TIC presents an alternative argument justifying the district court's weighing of the evidence. Specifically, TIC suggests that Aeroflex acquiesced in the district court's treatment of the parties' submissions as a proffer of evidence in place of an evidentiary hearing. According to TIC, this acquiescence occurred when Aeroflex objected to TIC's suggestion that an evidentiary hearing should be held and suggested that instead the parties should be allowed to conduct additional discovery. To support its argument that a preponderance of the evidence standard may apply in such a situation, TIC cites Boit, 967 F.2d 671. In Boit, the court recognized an evidentiary hearing does not require evidence [be] `taken orally in open court.' [Citation omitted.] Boit, 967 F.2d at 676. As support for this conclusion, the court cited the federal equivalent to K.S.A. 60-243(d)Fed. R. Civ. Proc. 43. The Kansas version states: When a motion relies on facts outside the record, the court may hear the matter on affidavits or on declarations pursuant to K.S.A. 53-601, and amendments thereto, or may hear it wholly or partly on oral testimony or on depositions. K.S.A. 2011 Supp. 60-243(d). Despite this provision, the Boit court noted there were several considerations relevant to the determination of whether the hearing would be conducted in this manner and an inappropriate application of these considerations could be an abuse of discretion. Among the factors to be considered is whether issues of credibility must be resolved. Boit, 967 F.2d at 676. A second consideration is whether the case could preclude a party from asserting at trialand before a jury if one has been demandedcontentions of fact contrary to what the district court found at the pretrial hearing. Boit, 967 F.2d at 677. The court noted that this concern was [e]specially troubling . . . when, for example, long-arm jurisdiction depends on a finding that the claim on the merits arises out of the defendant's contacts with the forum state. Boit, 967 F.2d at 677. The constitutional right to a trial by jury animates these concerns, the court concluded. Boit, 967 F.2d at 677. A third consideration relates to how the proceeding will impact judicial efficiency, remembering that `[j]udicial resources may be more efficiently deployed if the court holds but one [preponderance-of-the-evidence] hearing on the contested facts.' [Citation omitted.]. Boit, 967 F.2d at 677. A final consideration is whether postponing proof by a preponderance of the evidence until trial will allow proof `in a coherent, orderly fashion and without the risk of prejudicing [plaintiff's] case on the merits.' [Citation omitted.] Boit, 967 F.2d at 677. The court concluded: Concerns about troublesome implications of preponderance-of-the-evidence findings weigh heavily in favor of determining a motion to dismiss on the prima facie standard. [Citation omitted.] Boit, 967 F.2d at 677. In this case, there is no indication the district court gave notice it was conducting a hearing pursuant to K.S.A. 2011 Supp. 60-243(d) or that the parties discussed the possibility. This brings into question whether there was acquiescence. Certainly, we cannot find an explicit statement by Aeroflex in which it acquiesced to such a proceeding. But it is not clear that acquiescence or notice is necessary. Nevertheless, even if we were to agree with the Boit court and conclude the district court conducted a K.S.A. 2011 Supp. 60-243(d) evidentiary hearing without taking any testimony orally in open court, the various factors listed in Boit needed to be considered. Our review of the record does not reveal anything suggesting that the district court weighed any factors relating to whether it was appropriate to have conducted this type of hearing. Such a failure is an abuse of discretion. See Boit, 967 F.2d at 676-78; State v. Ward, 292 Kan. 541, 550, 256 P.3d 801 (2011), cert. denied ___ U.S. ___, 132 S.Ct. 1594, 182 L.Ed.2d 205 (2012) (abuse of discretion may occur when court fails to apply correct law or considerations). Further, many of the district court's conclusions, such as whether the defendants committed a tortious act and did so in Kansas, depend on the merits of the lawsuit. As we have noted, the caselaw suggests that in such circumstances the ruling on jurisdiction should most appropriately be deferred until a full trial on the merits. Consequently, we reject TIC's suggestions that the preponderance of evidence standard applies and that the district court was entitled to weigh evidence. In summary, if TIC presented evidence refuting a point necessary to a finding of jurisdiction, Aeroflex had to respond with some evidence but needed to only make a prima facie showing. In determining if Aeroflex met that burden, the evidence must be considered in the light most favorable to Aeroflex, as the party opposing the motion. With that standard in mind, we begin our de novo review of whether there was jurisdiction.