Opinion ID: 202048
Heading Depth: 5
Heading Rank: 1

Heading: Plaintiffs' Claims of Specific Jurisdiction

Text: 82 Plaintiffs argue that specific jurisdiction over HG Limited exists with respect to both their contract and tort claims. 83 For specific jurisdiction, this circuit divides the constitutional analysis into three categories: relatedness, purposeful availment, and reasonableness. Daynard, 290 F.3d at 60. For its contract claim[s], . . . [plaintiffs] may ask the court to draw inferences from the parties' `prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing.' Jet Wine & Spirits, Inc. v. Bacardi & Co., 298 F.3d 1, 7 (1st Cir.2002) (quoting Daynard, 290 F.3d at 52). For its tort claims, [plaintiffs] must show a sufficient `causal nexus' between [HG Limited's] contacts with [Massachusetts] and [plaintiffs'] causes of action. Id. (quoting Phillips Exeter Acad. v. Howard Phillips Fund, 196 F.3d 284, 289 (1st Cir.1999)). 84
85 Plaintiffs' primary theory of specific jurisdiction is that their breach of contract claim arises from HG Limited's assumption of the Partnership's obligations under the Agreement, which one of the plaintiffs entered into in Massachusetts. Specifically, plaintiffs contend that there is sufficient evidence in the record to support the propositions that the Partnership solicited Platten to become a partner in Massachusetts, that the Agreement was executed in Massachusetts, and that Platten's performance under the Agreement occurred primarily in Massachusetts. 86 HG Limited, in turn, counters that it has its principal place of business in Bermuda; maintains its books, records, and accounts in Bermuda; and pays taxes in Bermuda. Moreover, it maintains that it has never attempted to solicit or service customers in Massachusetts or to derive substantial revenue from services rendered in the state. As a holding company, it exercises only limited control over HGI, a fourth-tier subsidiary, which has an office in, among other places, Massachusetts. 87 We assume for present purposes that HG Limited fully assumed the Partnership's obligations under the Agreement. Nonetheless, we hold, as did the district court, that the record lacks support for plaintiffs' allegations that the Partnership established sufficient minimum contacts in Massachusetts to be subject to suit by plaintiffs in this state. Our inquiry begins and ends with the first prong of the constitutional inquiry, that of relatedness. 88 In support of specific jurisdiction over their contract claims, plaintiffs rely almost solely on the affidavits of Paul Platten. The first of those affidavits, and the only Platten affidavit admitted into the record, makes the following relevant allegations: 89 2. In February, 1989, I was hired by the defendant [HGI] with the Boston Office. . . . 90 7. As a condition of employment with the Hay Group, I was required to become a partner in the Partnership and, in or about 1992, in Massachusetts, I entered into an Agreement . . . with the Partnership. . . . 91 Aside from these allegations, plaintiffs provide no additional details about the place and circumstances of contracting. Flannery and Pfau's affidavits are silent with respect to the place of contracting, and neither of the two has ever claimed that their agreements with the Partnership were signed or executed in Massachusetts. 92 The Supreme Court has held that parties who `reach out beyond one state and create continuing relationships and obligations with citizens of another state' are subject to regulation and sanctions in the other [s]tate for the consequences of their activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting Travelers Health Ass'n v. Virginia, 339 U.S. 643, 647, 70 S.Ct. 927, 94 L.Ed. 1154 (1950)). Evidence of a defendant's entry into a contractual relationship with a plaintiff in another state is relevant to whether the defendant reached out to that state. But the mere fact that a plaintiff entered into a contract with a defendant in the forum state is not in and of itself dispositive of the personal jurisdiction question. The [Supreme] Court long ago rejected the notion that personal jurisdiction might turn on `mechanical' tests or on `conceptualistic. . . theories of the place of contracting or of performance.' Burger King, 471 U.S. at 478, 105 S.Ct. 2174 (omission in original) (quoting Int'l Shoe, 326 U.S. at 319, 66 S.Ct. 154; Hoopeston Canning Co. v. Cullen, 318 U.S. 313, 316, 63 S.Ct. 602, 87 L.Ed. 777 (1943)). Instead, [the Court has] emphasized the need for a `highly realistic' approach that recognizes that a `contract' is `ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction.' Id. at 479, 105 S.Ct. 2174 (quoting Hoopeston, 318 U.S. at 316-17, 63 S.Ct. 602). 93 As the district court points out, plaintiffs' affidavits are silent as to details regarding where negotiations took place, where the agreement was presented for signatures, where it was signed, where it was to be performed, and who represented the Partnership at the time of the negotiations. Aside from Platten's conclusory allegations that he performed Partnership business in Massachusetts, none of the plaintiffs offer additional information on whether the Partnership or HG Limited directed an out-of-state activity at the forum state, see Phillips Exeter Acad., 196 F.3d at 289, whether the parties' Agreement contemplated ongoing interaction between Platten in Massachusetts and the Partnership or HG Limited in Bermuda, see Daynard, 290 F.3d at 61, or whether the two other plaintiffs' claims are at all related to the Partnership's and HG Limited's contacts in Massachusetts. Plaintiffs fail to make out a prima facie case for specific jurisdiction on the contract theory.
94 Also unsuccessful is plaintiffs' argument that specific jurisdiction over HG Limited exists on account of the Partnership's alleged misrepresentation and breach of fiduciary duty. 95 To satisfy the relatedness prong of the constitutional inquiry in a tort case, 96 [t]he evidence produced to support specific jurisdiction must show that the cause of action either arises directly out of, or is related to, the defendant's forum-based contacts. The relatedness requirement is not an open door; it is closely read, and it requires a showing of a material connection. This court steadfastly reject[s] the exercise of personal jurisdiction whenever the connection between the cause of action and the defendant's forum-state contacts seems attenuated and indirect. Instead, the defendant's in-state conduct must form an `important, or [at least] material, element of proof' in the plaintiff's case. A broad but-for argument is generally insufficient. . . . [D]ue process demands something like a `proximate cause' nexus. 97 Harlow, 432 F.3d at 60-61 (citations omitted) (quoting Pleasant St. I, 960 F.2d at 1089; Cambridge Literary Props., 295 F.3d at 65); see also Phillips Exeter Acad., 196 F.3d at 289. None of plaintiffs' claims is sufficiently related to HG Limited's Massachusetts contacts. 98 Plaintiffs allege that Platten was induced to enter into the Agreement by misrepresentations that were made by an agent of the Partnership in Massachusetts and that [t]he scheme to defraud and mislead Platten was furthered by four letters sent to him in Massachusetts from the Partnership's New York lawyers and Matthews himself. They further allege that [t]wo similar letters were sent by Matthews and the Partnership's New York counsel to Flannery in Massachusetts. 11 These letters all dealt with the non-competition and termination distribution clauses of the Agreement, and the plaintiffs' rights and responsibilities thereunder. 12 99 Again, plaintiffs failed to provide any details in their complaint or affidavits about the circumstances surrounding the parties' entry into the Agreement, including any misrepresentations that were made at that time, who may have made them, and in what capacity. Thus, any alleged misrepresentations made by the Partnership at the time of contracting cannot be the basis of specific jurisdiction over HG Limited. 100 As for the correspondence from the Partnership's lawyers and Matthews to Platten and Flannery, that itself does not suffice to show relatedness. See Far W. Capital, Inc. v. Towne, 46 F.3d 1071, 1077 (10th Cir.1995) (It is well-established that phone calls and letters are not necessarily sufficient in themselves to establish minimum contacts.); see also Nicholas v. Buchanan, 806 F.2d 305, 307-08 (1st Cir. 1986) (per curiam) (collecting cases). We are doubtful that the letters even provide a basis for a viable cause of action. Platten and Flannery did not allege reasonable reliance on the purported misrepresentations; thus, any harm that Platten or Flannery suffered did not arise out of those misrepresentations, but instead out of the Partnership's alleged breach of the promise to pay them their termination distributions. In specific jurisdiction terms, plaintiffs have not shown a material connection between their injuries and HG Limited's contacts in Massachusetts and therefore cannot meet the relatedness requirement of the due process inquiry. 13 See Harlow, 432 F.3d at 61. 101 Nor does HG Limited's alleged breach of fiduciary duty satisfy the constitutional standard for asserting specific jurisdiction. A breach of fiduciary duty occurs [in the state] where the fiduciary acts disloyally. Phillips Exeter Acad., 196 F.3d at 291. Thus, for minimum contacts analysis, even if the effects of the alleged breach were felt in Massachusetts, there is no evidence in the record that the alleged breach itself occurred in this state, see id. (concluding that an in-forum effect of an extra-forum breach . . . [was] inadequate to support a finding of relatedness), as opposed to, say, Bermuda, where HG Limited has its usual place of business, or Pennsylvania, from whence Chris Matthews allegedly controlled the Partnership.