Opinion ID: 4558818
Heading Depth: 4
Heading Rank: 1

Heading: Specific Jurisdiction over Bachosa

Text: We use a three-prong test for analyzing claims of specific jurisdiction. First, “[t]he non-resident defendant must purposefully direct his activities or consummate some transaction with the forum or resident thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws.” Schwarzenegger, 374 F.3d at 802 (quoting Lake v. Lake, 10 GLOB. COMMODITIES TRADING GRP. V. BENEFICIO DE ARROZ CHOLOMA 817 F.2d 1416, 1421 (9th Cir. 1987)). Second, the claim must arise out of or relate to the defendant’s forum-related activities. Id. Finally, the exercise of jurisdiction must be reasonable. Id. The plaintiff must satisfy the first two prongs of this test. “If the plaintiff succeeds in satisfying both of the first two prongs, the burden then shifts to the defendant to ‘present a compelling case’ that the exercise of jurisdiction would not be reasonable.” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476–78 (1985)). Under the first prong of the specific-jurisdiction inquiry, “purposeful availment” and “purposeful direction” are distinct concepts. Id. at 802. Purposeful availment generally provides a more useful frame of analysis for claims sounding in contract, while purposeful direction is often the better approach for analyzing claims in tort. See id.; Picot, 780 F.3d at 1212. However, our cases do not impose a rigid dividing line between these two types of claims. When both contract and tort claims are at issue, both tests are relevant. See Picot, 780 F.3d at 1212. At bottom, both purposeful availment and purposeful direction ask whether defendants have voluntarily derived some benefit from their interstate activities such that they “will not be haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts.” Burger King, 471 U.S. at 474–75 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 773–74 (1984)). The Supreme Court’s decision in Burger King guides our analysis in this case. Burger King Corporation sued a Michigan franchisee in federal court in Florida—where Burger King had its principal place of business—for breach of the franchise agreement. Id. at 466–68. The defendant franchisee was a Michigan resident with no physical GLOB. COMMODITIES TRADING GRP. V. 11 BENEFICIO DE ARROZ CHOLOMA connection to Florida. Id. at 479. Indeed, he had never been to Florida. Nonetheless, the Court held that because Burger King and the franchisee had agreed to an ongoing business relationship with foreseeable consequences in Florida, the franchisee was amenable to suit there. The franchise agreement was not an isolated or fleeting business contact. Instead, it was a contract that contemplated a long-term relationship between the parties and “continuing and widereaching contacts with Burger King in Florida.” Id. at 480. The Court rejected any sort of “mechanical test[]” based on “conceptualistic theories of the place or contracting or of performance.” Id. at 478–79 (internal citations and quotation marks omitted). Whether performance was to be rendered in Michigan or in Florida was disputed in the case. See id. at 476; id. at 488 (Stevens, J., dissenting). Rather than looking to the place of performance, the Court looked to the business reality behind the particular contract at issue. The Court wrote, “[W]e have 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. It is these factors—prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing—that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.” Id. at 479 (internal citations and quotation marks omitted). Following the lead of the Court in Burger King, we have emphasized that courts must evaluate the parties’ entire course of dealing, not solely the particular contract or tortious 12 GLOB. COMMODITIES TRADING GRP. V. BENEFICIO DE ARROZ CHOLOMA conduct giving rise to the claim, when assessing whether a defendant has minimum contacts with a forum. See, e.g., Picot, 780 F.3d at 1212; Sher, 911 F.2d at 1363–64; see also Yahoo! Inc. v. La Ligue Contre Le Racisme Et L’Antisemitisme, 433 F.3d 1199, 1207–08 (9th Cir. 2006) (en banc) (per curiam) (collecting cases). In cases where we have held that a contract between a forum resident and a nonresident did not give rise to specific jurisdiction in the forum, we have done so because the business relationship between the parties was fleeting or its center of gravity lay elsewhere. See, e.g., Boschetto v. Hansing, 539 F.3d 1011 (9th Cir. 2008) (holding that a single eBay sale to a California resident did not give rise to personal jurisdiction there); Thomas P. Gonzales Corp. v. Consejo Nacional De Produccion De Costa Rica, 614 F.2d 1247 (9th Cir. 1980) (holding that a contract resulting from public bidding in Costa Rica did not give rise to personal jurisdiction in California). Interpreting genuine factual disputes in Global’s favor—as we must in this posture—we conclude that Global has made a prima facie showing that Bachosa “reach[ed] out beyond [Honduras]” to “create continuing relationships and obligations with citizens of [California].” Burger King, 471 U.S. at 473. Bachosa sustained a relationship with Global over several years and hundreds of contracts, purchasing millions of dollars of goods to be shipped from the United States. The goods Bachosa purchased were graded according to American standards, and inspection certificates were issued in California. Bachosa consistently made payments on the contracts to Global in California. When difficulties arose concerning the two contracts at issue here, Bachosa induced Global to continue doing business with it by acknowledging its ongoing obligations to make payments in GLOB. COMMODITIES TRADING GRP. V. 13 BENEFICIO DE ARROZ CHOLOMA California. The promise was made for the purpose of obtaining benefits from a California corporation. Although Burger King does not require physical presence, Global further alleges that Bachosa’s officers came to Global’s office in California and while there made the promises central to this dispute. The district court erred by considering the memorandum, note, and guaranty in isolation, ignoring the business reality in which they were embedded. As just described, those agreements followed a lengthy and ongoing course of dealing. They recognized a continuing obligation in connection with past sales on which Bachosa had allegedly failed to make payments. Moreover, Global’s claims here are not limited to breach of the memorandum, note, and guaranty. Global’s complaint also included two claims in indebitatus assumpsit—“common counts,” in the parlance of California pleading—alleging, independently of the agreements, that Bachosa had failed to pay for goods it had received. Those claims related to the underlying commodities transactions, not to the subsequently executed memorandum, note, and guaranty. In sum, Bachosa maintained numerous contacts with California during the course of its years-long business relationship with Global. Those contacts gave rise to this dispute, and it was reasonable for Bachosa to expect that it would be haled into court in California to fulfill its obligations and to account for harm it foreseeably caused there. We therefore hold that the district court had personal jurisdiction over Bachosa in this action. 14 GLOB. COMMODITIES TRADING GRP. V. BENEFICIO DE ARROZ CHOLOMA