Opinion ID: 166639
Heading Depth: 3
Heading Rank: 1

Heading: Federal Due Process

Text: 13 The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quotations omitted). Thus, a court may exercise personal jurisdiction over a nonresident defendant only so long as there exist minimum contacts between the defendant and the forum State. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (quotations omitted). The minimum contacts necessary for specific personal jurisdiction are established if the defendant has purposefully directed his activities at residents of the forum and the litigation results from alleged injuries that arise out of or relate to those activities. Soma Med. Int'l, 196 F.3d at 1298 (quotations omitted). 14 Thus, an analysis of whether a court's exercise of specific personal jurisdiction comports with the Due Process Clause is a two-step inquiry. See Benton v. Cameco Corp., 375 F.3d 1070, 1075 (10th Cir.2004), cert. denied, ___ U.S. ___, 125 S.Ct. 1826, 161 L.Ed.2d 723 (2005). First we consider whether 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, 444 U.S. at 297, 100 S.Ct. 559, 62 L.Ed.2d 490. Second, if the defendant's actions create sufficient minimum contacts, we must then consider whether the exercise of personal jurisdiction over the defendant offends traditional notions of fair play and substantial justice. OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir.1998) (quotations omitted).
15 In determining whether a defendant has established sufficient minimum contacts with the forum state, we examine whether the defendant purposefully avail[ed] itself of the privilege of conducting activities within the forum State. Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). A defendant's contacts are sufficient if the defendant purposefully directed its activities at residents of the forum, and . . . the plaintiff's claim arises out of or results from actions by the defendant himself that create a substantial connection with the forum state. OMI, 149 F.3d at 1091 (quotations, citations, and emphasis omitted). 16
17 The fact that Sporoptic made a contract with Pro Axess, which is located in Utah, is not enough on its own to allow a Utah court to exercise jurisdiction over Sporoptic. See Burger King, 471 U.S. at 478, 105 S.Ct. 2174 (If the question is whether an individual's contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party's home forum . . . the answer clearly is that it cannot.) (emphasis in original). However, with respect to interstate contractual obligations, . . . 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 State for the consequences of their activities. Id. at 473, 105 S.Ct. 2174 (quotations omitted). 18 In this case, Sporoptic solicited Pro Axess's assistance in procuring sunglasses frames. While not conclusive, this solicitation is itself some evidence suggesting purposeful availment. Far West Capital, 46 F.3d at 1076. Sporoptic specifically sought out Pro Axess because Pro Axess had long-standing business relationships with many manufacturers in Asia. 3 While the manufacturing and shipping of the product were not to take place in Utah, services necessary for the contract were to be performed in Utah. See Benton, 375 F.3d at 1077. Such services included choosing a manufacturer for the sunglasses frames, arranging for rough handmade models to be made into machined prototypes, arranging the details for the manufacture of the frames at a plant in China, arranging for the inspection of the frames in Hong Kong, invoicing and coordinating the manufacturing process, and arranging for the shipping of the frames from Hong Kong to France. Although the agreement between the parties was a single contract, fulfilling the contract required a continuing relationship based on the provision of services. By procuring such services from Pro Axess, which operates its business in Utah, Sporoptic purposefully avail[ed] itself of the privilege of conducting activities within the forum State. Hanson, 357 U.S. at 253, 78 S.Ct. 1228. 19 In addition, Sporoptic and Orlux exchanged various direct communications with Pro Axess. Although phone calls and letters are not necessarily sufficient in themselves to establish minimum contacts, Far West Capital, 46 F.3d at 1077, such materials provide additional evidence that Sporoptic pursued a continuing business relationship with a Utah corporation. Sporoptic rightly points out that its direct communications with Pro Axess in Utah were minimal. However, it is not just Sporoptic's direct communications with Pro Axess that are relevant, but also Orlux's communications with Pro Axess. Companies conducting business through their subsidiaries can qualify as transacting business in a state, provided the parent exercises sufficient control over the subsidiary. See Curtis Publ'g Co. v. Cassel, 302 F.2d 132, 137 (10th Cir.1962) ([A] wholly owned subsidiary may be an agent and when its activities as an agent are of such a character as to amount to doing business of the parent, the parent is subjected to the in personam jurisdiction of the state in which the activities occurred.); Phone Directories Co. v. Contel Corp., 786 F.Supp. 930, 943 (D.Utah 1992) (noting that a parent company's exertion of significant influence on a subsidiary suffices for a court to exercise personal jurisdiction over parent). 4 20 Sporoptic exercised considerable control over Orlux, which acted as its agent. For example, Sporoptic's president chose the president of Orlux. Specifically relevant to the instant case, Sporoptic's president approved the concept of selling a line of low-cost sunglasses in the United States, then used Orlux to implement the project. Orlux faxed Pro Axess a preliminary purchase order for sunglasses frames, and Sporoptic followed up with a formal purchase order confirming the details. Sporoptic relied on Orlux to cancel the order. Given this relationship, we examine not only Sporoptic's direct communications with Pro Axess, but also Orlux's communications with Pro Axess. 21 Sporoptic and Orlux exchanged numerous faxes, letters, and phone calls with Pro Axess in Utah about the order itself and the potential for modifications to the order. While the quantum of contacts between the parties is not determinative of personal jurisdiction, Far West Capital, 46 F.3d at 1077, the purposeful availment reflected in the content of these communications supports a Utah court's exercise of jurisdiction over Sporoptic. 5 22
23 It is clear that there is a nexus between Sporoptic's contacts with Utah and Pro Axess's injuries, such that Pro Axess's injuries arise out of or relate to [Sporoptic's] activities. Burger King, 471 U.S. at 472, 105 S.Ct. 2174 (quotations omitted); see also OMI, 149 F.3d at 1095. Pro Axess's breach of contract claims arose from Sporoptic's solicitation of Pro Axess, development of a business agreement with Pro Axess, and subsequent communications with Pro Axess. Those same interactions also constitute Sporoptic's contacts with Utah. Thus, Pro Axess's claims arise out of Sporoptic's contacts with Utah. 24 Sporoptic argues that Pro Axess's presence in Utah is a coincidence that is inadequate to allow a Utah court to exercise specific personal jurisdiction over Sporoptic. However, this is not a case where [t]he quality and nature of Sporoptic's contact with Utah was so random, fortuitous, or attenuated that it cannot fairly be said that [Sporoptic] should reasonably anticipate being haled into court in Utah. Burger King, 471 U.S. at 486, 105 S.Ct. 2174 (quotations and footnote omitted). After all, this is not a case in which the defendant's only contacts with the forum resulted from the unilateral activity of another party or a third person. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Thus, Sporoptic's reliance on Soma Med. Int'l and Lakeside Bridge & Steel Co. v. Mountain State Constr. Co., 597 F.2d 596 (7th Cir.1979), is misplaced. See Soma Med. Int'l, 196 F.3d at 1299 (involving a plaintiff going outside its home state to initiate contact with the defendant); Lakeside Bridge & Steel Co., 597 F.2d at 598, 603 (same). Rather, Sporoptic voluntarily sought out and conducted business with Pro Axess, with whom Sporoptic had contracted before and whom Sporoptic therefore knew to be located in Utah. 6 25 Although this is a somewhat close case, we believe that Sporoptic purposefully directed [its] activities at residents of the forum, and the litigation result[ed] from alleged injuries that ar[o]se out of or relate to those activities. Burger King, 471 U.S. at 472, 105 S.Ct. 2174 (quotations and citation omitted). As a result, Sporoptic's conduct and connection with the forum State [were] such that [it] should reasonably anticipate being haled into court there. World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559, 62 L.Ed.2d 490. Thus, we hold that Sporoptic had sufficient minimum contacts with Utah to support a Utah court's exercise of personal jurisdiction over Sporoptic. 26
27 In analyzing whether a court's exercise of personal jurisdiction offends traditional notions of fair play and substantial justice, Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), we determine whether a district court's exercise of personal jurisdiction over a defendant with minimum contacts is reasonable in light of the circumstances surrounding the case. OMI, 149 F.3d at 1091 (quotations omitted). We do so by considering: 28 (1) the burden on the defendant, (2) the forum state's interest in resolving the dispute, (3) the plaintiff's interest in receiving convenient and effective relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental social policies. 29 Id. at 1095. The analyses of minimum contacts and reasonableness are complementary, such that 30 the reasonableness prong of the due process inquiry evokes a sliding scale: the weaker the plaintiff's showing on [minimum contacts], the less a defendant need show in terms of unreasonableness to defeat jurisdiction. The reverse is equally true: an especially strong showing of reasonableness may serve to fortify a borderline showing of [minimum contacts]. 31 Id. at 1092 (alterations in original) (quotations omitted). 32 In this case, we have determined that Sporoptic purposefully. . . directed [its] activities at Utah. Burger King, 471 U.S. at 477, 105 S.Ct. 2174. In such a case, where a defendant . . . seeks to defeat jurisdiction, [it] must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Id. Sporoptic cannot meet this exacting standard. 33
34 [T]he burden on the defendant of litigating the case in a foreign forum is of primary concern in determining the reasonableness of personal jurisdiction. . . . When the defendant is from another country, this concern is heightened and great care and reserve should be exercised before personal jurisdiction is exercised over the defendant. OMI, 149 F.3d at 1096 (quotations omitted). However, modern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity. Burger King, 471 U.S. at 474, 105 S.Ct. 2174 (quoting McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957)). 35 In this case, Sporoptic's headquarters in France is a substantial distance from Utah, but Sporoptic's president has demonstrated his ability to journey to the United States for the company's business dealings by meeting with Pro Axess in New York. Moreover, Sporoptic owns a subsidiary in California. Thus, Sporoptic's employees and its agents travel to and operate in the United States to conduct economic activity, minimizing concerns about the burden that litigating in Utah might place on them. Moreover, any fears that Sporoptic might not be able to obtain a fair trial because of language issues are misplaced, for the record reveals that Sporoptic's employees and agents regularly and adequately conduct business in English. Accordingly, forcing Sporoptic to litigate this dispute in Utah is not gravely difficult and inconvenient. Burger King, 471 U.S. at 478, 105 S.Ct. 2174. 36
37 States have an important interest in providing a forum in which their residents can seek redress for injuries caused by out-of-state actors. OMI, 149 F.3d at 1096. The state's interest is also implicated where resolution of the dispute requires a general application of the forum state's laws. Id. In this case, this factor favors Utah's exercise of jurisdiction over Sporoptic. Pro Axess is a Utah corporation with its principal place of business in Utah, and the state has an interest in providing it with a forum for its suit against Sporoptic. 7 38
This factor 39 hinges on whether the Plaintiff may receive convenient and effective relief in another forum. This factor may weigh heavily in cases where a Plaintiff's chances of recovery will be greatly diminished by forcing him to litigate in another forum because of that forum's laws or because the burden may be so overwhelming as to practically foreclose pursuit of the lawsuit. 40 Id. at 1097. Because common law governs this suit, litigating the case in France, a civil law country, would be difficult. Moreover, Pro Axess's management would face the hardship of traveling to France and conducting litigation in a language with which it is not readily apparent that they are familiar. We find that Pro Axess would not be able to receive convenient and effective relief by bringing suit in France, thus this factor weighs in favor of Utah's exercise of jurisdiction. 41
42 This factor asks whether the forum state is the most efficient place to litigate the dispute. Id. Key [sic] to this inquiry are the location of witnesses, where the wrong underlying the lawsuit occurred, what forum's substantive law governs the case, and whether jurisdiction is necessary to prevent piecemeal litigation. Id. (citations omitted). Based on the nature of Pro Axess's claims against Sporoptic, and the fact that Sporoptic operated through Orlux, many of the witnesses in the dispute are based in the United States. Likewise, common law, not civil law, governed the dispute. Therefore, we find that litigating the dispute in Utah would be more efficient than doing so in France. 43
44 The fifth factor of the reasonableness inquiry focuses on whether the exercise of personal jurisdiction by [the forum] affects the substantive social policy interests of other states or foreign nations. Id. [G]reat care and reserve should be exercised when extending our notions of personal jurisdiction into the international field. Id. at 1097-98. Therefore, we must look closely at the extent to which an exercise of personal jurisdiction by Utah over Sporoptic interferes with France's sovereignty. Relevant facts include whether one of the parties is a citizen of the foreign nation, whether the foreign nation's law governs the dispute, and whether the foreign nation's citizen chose to conduct business with a forum resident. Id. at 1098 (citations omitted). Sporoptic is a French company. However, this dispute is not governed by French law, and Sporoptic chose to conduct business with Pro Axess, a resident of Utah. Therefore, we find that an exercise of personal jurisdiction would not affect France's policy interests. 45 In sum, these five factors do not weigh in Sporoptic's favor. Sporoptic certainly cannot establish a compelling case that the exercise of jurisdiction by a Utah court would be unreasonable. Burger King, 471 U.S. at 477, 105 S.Ct. 2174. Thus, we hold that Utah's exercise of personal jurisdiction over Sporoptic would not offend traditional notions of fair play and substantial justice. 8 Therefore, the district court's exercise of personal jurisdiction over Sporoptic satisfies both prongs of the federal due process analysis.