Opinion ID: 613145
Heading Depth: 4
Heading Rank: 1

Heading: The Dismissal of the Claims Against Newmont

Text: The district court dismissed the plaintiffs' claims against Newmont on the ground that the court lacked both general and specific personal jurisdiction over Newmont. We review de novo a dismissal for lack of personal jurisdiction. Intera Corp. v. Henderson, 428 F.3d 605, 614 (6th Cir.2005). To comply with due process, a court's exercise of its power over an out-of-state defendant must not offend `traditional notions of fair play and substantial justice.' Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). This requires that the defendant be shown to have minimum contacts with the forum state, id., ensuring that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there, World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). The exercise of jurisdiction must also be permitted by the state's long-arm statute. Calphalon Corp. v. Rowlette, 228 F.3d 718, 721 (6th Cir. 2000). [1] Finally, personal jurisdiction can exist in two forms: specific jurisdiction and general jurisdiction. In contrast to general, all-purpose jurisdiction, specific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction. Goodyear Dunlop Tires Operations, S.A. v. Brown, ___ U.S. ___, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011) (internal quotation marks omitted). The party seeking to assert personal jurisdiction bears the burden of demonstrating that such jurisdiction exists. Bird v. Parsons, 289 F.3d 865, 871 (6th Cir.2002). Where the district court has not held an evidentiary hearing on the issue, however, the plaintiff need only make a prima facie showing of jurisdiction. In this situation, we will not consider facts proffered by the defendant that conflict with those offered by the plaintiff, and will construe the facts in a light most favorable to the nonmoving party. Id. (internal citations and quotation marks omitted). Before the district court, the plaintiffs alleged that Newmont had the following contacts with Michigan: that (1) Newmont Oil is a registered subsidiary of Newmont in the State of Michigan, (2) Newmont Indonesia Limited did major, substantial business with Ford Motor Company, a Michigan corporation, (3) Newmont's sale of stock to members of the general public included individuals in Michigan, (4) Newmont made contacts with the State of Michigan by attempting to resolve this dispute, and (5) Newmont also made contacts with the State of Michigan by sending significant and important documents to the plaintiffs in Michigan. R. 61 (Op. at 5). The plaintiffs also argued that personal jurisdiction over Newmont was established under § 27 of the Securities and Exchange Act of 1934, 15 U.S.C. § 78aa, by this section's provision of nationwide service of process. [2] The district court first rejected the notion that the contacts by Newmont with Michigan alleged by the plaintiffs were sufficient to constitute continuous and systematic activities within the State of Michigan such that general jurisdiction was established. R.61 (Op. at 5-6). The court then held that these contacts also were insufficient to establish specific jurisdiction. In the court's view, the allegations regarding Newmont Oil, Newmont Indonesia Limited, and Newmont's dispute-resolution activities were not related to the plaintiffs' claims. The district court found the third jurisdictional allegation, regarding Newmont's sale of stock, also insufficient because no authority supported the proposition that personal jurisdiction may be established merely as a result of a purchase of stock on a public exchange by a resident of the forum state, and, in fact, several courts have held the opposite. With respect to Newmont Oil and Newmont Indonesia's alleged activities, the plaintiffs asserted personal jurisdiction under the theory that these subsidiaries acted as the alter-ego of Newmont. The alter-ego theory provides for personal jurisdiction if the parent company exerts so much control over the subsidiary that the two do not exist as separate entities but are one and the same for purposes of jurisdiction. Id. at 7 (quoting Thomson v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 362 (6th Cir.2008)). In the view of the district court, however, the plaintiffs set forth no facts to support the application of this theory of jurisdiction with respect to Newmont. Id. The district court found that Newmont present[ed] uncontroverted evidence that Newmont Oil has not been its subsidiary since 1988, when it was sold. Further, Newmont Oil withdrew its Michigan registration in 1990. Id. (citation omitted). The district court also rejected the allegation of major, substantial business between Newmont Indonesia Limited and Ford Motor Company. According to the district court, Newmont Indonesia Limited only guaranteed an obligation payable by Australia Magnesium Corporation to Ford Motor Company. In other words, Newmont Indonesia conducted business with a company (presumably located in Australia, not Michigan) that in turn conducted business with a Michigan company. Id. at 8. The district court held that Newmont's dispute-resolution activities do not constitute the type of purposeful availment of a forum state that results in personal jurisdiction. Id. Finally, the district court rejected the plaintiffs' argument that personal jurisdiction over Newmont was established under the nationwide-service-of-process provision in the 1934 Act. According to the district court, although the plaintiffs alleged that Newmont had filed materially false financial statements in violation of the 1934 Act, see 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5, the plaintiffs had not alleged that they had purchased or sold any Newmont securitiesa necessary prerequisite to bringing a private action of this type. Id. at 10 (citing Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 95 S.Ct. 1917, 44 L.Ed.2d 539 (1975) (holding that only purchasers and sellers of a security have a private right of action under Section 10(b) and Rule 10b-5)). Consequently, the district court concluded that the plaintiffs' securities-fraud claim did not support the exercise of personal jurisdiction over Newmont. The plaintiffs make two basic arguments in response to the district court's holding. First, they point to the same contacts by Newmont that they presented to the district court, except for the fourth and fifth (which related to Newmont's dispute-resolution activities), and they claim that these are sufficient minimum contacts by Newmont to fall within Michigan's long-arm statute. Second, the plaintiffs cite several cases for the proposition that, under the Securities and Exchange Act of 1934, Newmont needed to have only minimum contacts with the United States as a whole, rather than with a particular state, in order for a federal court to exercise personal jurisdiction consistent with the due process clause. Pl. Br. in No. 09-2117 at xxv-xxvi. We see no merit in either of these arguments. With respect to the nationwide-service-of-process provision of the 1934 Act, the district court was correct in holding that the plaintiffs have failed to state a claim that Newmont filed materially false financial statements in violation of the 1934 Act. See 15 U.S.C. § 78j(b); 17 C.F.R. § 240.10b-5. The plaintiffs have not alleged that any of Newmont's allegedly false statements were in connection with the sale or purchase of any of its securities, and there is no evidence that the plaintiffs themselves purchased or sold any Newmont securities. See Blue Chip Stamps, 421 U.S. at 749, 95 S.Ct. 1917. Under these circumstances, the 1934 Act does not establish a basis for finding personal jurisdiction over Newmont. The district court correctly rejected the plaintiffs' arguments that Newmont Oil is a registered subsidiary of Newmont in the State of Michigan, that Newmont Indonesia Limited had substantial contacts with Ford Motor Company, and that Newmont's sale of stock to the general public included individuals in Michigan. First, although Newmont Oil formerly was a registered subsidiary of Newmont in Michigan, Newmont Oil was sold by Newmont in 1988 and Newmont Oil withdrew its Michigan registration in 1990. Thus, Newmont Oil's former Michigan registration does not suffice to establish personal jurisdiction over Newmont in this action that does not relate to Newmont Oil's past period of registration. Second, Newmont Indonesia Limited's contacts with a Michigan corporation, the Ford Motor Company, were insufficient to meet § 600.705's terms. As the district court pointed out, Newmont Indonesia Limited's activities [3] amounted only to conducting business with a non-Michigan company (the Australian Magnesium Corporation) that, in turn, did business with the Ford Motor Company, which does not constitute [t]he transaction of any business within the state. MICH. COMP. LAWS § 600.705(1). Finally, the fact that Newmont's sale of stock to the general public may have included sales to individuals within Michigan does not support specific or general jurisdiction. [4] With respect to specific jurisdiction, although the sale of stock to an individual in Michigan may, in theory, constitute [t]he transaction of any business within the state, § 600.705(1) grants only limited personal jurisdiction as a result of such a transaction; jurisdiction is granted to enable the court to render personal judgments against the individual or his representative arising out of [the transaction of business within Michigan]. MICH. COMP. LAWS § 600.705 (emphasis added). Here, the plaintiffs' only claim that aris[es] out of this transaction of business is its claim for securities fraud in violation of Section 10(b) and Rule 10b-5, but as mentioned above, the plaintiffs have not alleged that they ever purchased any of these securities in Michigan. Furthermore, with respect to general jurisdiction, we agree with the district court that there appears to be no authority for the proposition that a sale of stock to the general public that includes residents of the forum state constitutes continuous and systematic contact with that state sufficient to confer general personal jurisdiction; instead, there is authority for the exact opposite conclusion. See Sheldon v. Khanal, 605 F.Supp.2d 1179, 1185 (D.Kan.2008) (rejecting the notion that the sale of shares of stock through a public exchange supports the exercise of general jurisdiction); Action Mfg. Co. v. Simon Wrecking Co., 375 F.Supp.2d 411, 425-26 (E.D.Pa.2005) (The sale of shares of World Fuel Corp. stock to the national public through the NYSE does not constitute continuous and systematic contacts with Pennsylvania and is not sufficient to establish general personal jurisdiction over Corp. in Pennsylvania.); see also Young v. Actions Semiconductor Co., 386 Fed.Appx. 623, 626 (9th Cir.2010) (unpublished memorandum opinion) ([A] foreign corporation's sale of stock in the forum is insufficient by itself to create general jurisdiction.). As Newmont states, Appellants' argument, if accepted, would subject nearly every public company to [personal] jurisdiction in all 50 states. Newmont Br. in No. 09-2117 at 14. In addition, even if Newmont Oil and Newmont Indonesia Limited did have contact with the State of Michigan, the district court correctly rejected the applicability of the alter-ego theory. The plaintiffs have not alleged that Newmont exerts so much control over Newmont Oil or Newmont Indonesia Limited that Newmont and either of the other companies do not exist as separate entities but are one and the same for purposes of jurisdiction. Thomson, 545 F.3d at 362. We therefore affirm the district court's dismissal of the claims against Newmont pursuant to Rule 12(b)(2).