Opinion ID: 1404850
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Heading: Fourteenth Amendment Due Process Requirements

Text: Expanding interstate business and the increasing necessity to protect state residents also gives rise to a converse consideration of due process protection for defendants. ASC expresses a legitimate concern with protecting parties from unforeseeably being haled into court in a foreign jurisdiction regarding a transitory or ephemeral transaction. Therefore, we turn to the analysis of jurisdiction under the due process requirements of the Fourteenth Amendment. It is well established that jurisdiction must result from `minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.' Synergetics, 701 P.2d at 1110 (quoting International 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, 342, 85 L.Ed. 278 (1940))). Consequently, defendant must have `purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.' Mallory Eng'g, Inc. v. Ted R. Brown & Assocs., 618 P.2d 1004, 1008 (Utah 1980) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)). Specific personal jurisdiction may be asserted... `only on claims arising out of defendant's forum-state activity,' Neways, Inc. v. McCausland, 950 P.2d 420, 423 (Utah 1997) (quoting Abbott G.M. Diesel, Inc. v. Piper Aircraft Corp., 578 P.2d 850, 853 n. 6 (Utah 1978)), and the connection between the defendant and the forum state must be such that the defendant `should reasonably anticipate being haled into court there.' Synergetics, 701 P.2d at 1110 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). Finally, the determination of whether Utah can justify asserting jurisdiction over defendants hinges on the balancing of the fairness to the parties and the interests of the State in assuming jurisdiction. Synergetics, 701 P.2d at 1110-11 (footnote omitted); see also Burger King, 471 U.S. at 478, 105 S.Ct. 2174 (jurisdiction must not put party at severe comparative disadvantage). ASC's transaction of business in Utah, as discussed above, fulfills the requirement of minimum contacts. Additionally, [b]y transacting business in this state, [defendant] satisfied the purposeful activity requirement of Hanson and Mallory.  Synergetics, 701 P.2d at 1110. ASC purposefully availed itself of the benefits and protections of Utah law when it signed the distribution agreement and commenced a regular course of ordering products from SII. We found in Synergetics that [t]he same conduct establishes the requisite connection between the activity and the cause of action. Id. This is also true in the instant case with regard to ASC II. As SII aptly noted in its memorandum in opposition to the motion to dismiss: [a]ny nonresident business that confirms that it intends to act as a national and international distributor for a Utah business and then places hundreds of purchase orders for goods that are to be shipped and invoiced from Utah, with full knowledge that it must perform its part of the bargain by paying for the goods in Utah[,] should not be surprised when it gets haled into court after it fails to pay no fewer than 170 invoices. ASC relies on Conn v. Whitmore, 9 Utah 2d 250, 255, 342 P.2d 871, 874-75 (1959), to support its argument that acquiring jurisdiction from a mail order purchase would jeopardize interstate business by subjecting every such purchaser to jurisdiction in a distant and inconvenient forum. We emphasize that ASC's connection with Utah is not based on isolated or occasional transactions, nor is it a traditional mail order purchase. Rather, ASC engaged as a wholesale purchaser in a regular and continuing course of business with SII pursuant to a three-year distribution agreement. Therefore, the transactions at issue here constitute much more than standard retail mail order purchasers. Turning to the question of fairness to the parties and the interest of the state, we note that where a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Burger King, 471 U.S. at 477, 105 S.Ct. 2174. ASC II has presented no such evidence. Furthermore, `[i]n undertaking interstate business [a defendant] must recognize and accommodate... the probability and necessity of litigating in foreign forums.' Synergetics, 701 P.2d at 1111 (quoting Mallory, 618 P.2d at 1009 n. 8). The distribution agreement between SII and ASC covered the United States and six foreign countries. Clearly, ASC was conducting an interstate business. Additionally, the amount in controversy, $118,000, is large enough that ASC II is unlikely to default on its defense due to the burden of defending in a foreign forum. See id. Where the amount in controversy ... is substantive compared to the costs of litigating the action, there is only minimal possibility of defendants defaulting on the basis that they cannot afford to litigate in the forum. Id. Balanced against the inconvenience to the defendants is the express interest the state has in ensuring protection to its residents from the acts of nonresidents. Id. The legislature has clearly mandated, as discussed above, that the rules of jurisdiction be applied so as to give Utah residents the broadest protection permitted by the federal constitution. Therefore, to borrow the language from Burger King, [w]e cannot conclude that [Utah] had no `legitimate interest in holding [ASC II] answerable on a claim related to' contacts [it] had established in that State. 471 U.S. at 482-83, 105 S.Ct. 2174 (citing Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 776, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984)). Accordingly, we hold that Utah's jurisdiction over ASC II accords with Fourteenth Amendment due process of law.