Court Opinion

ID: 4438605
Source: CourtListenerOpinion
Date Created: 2019-09-17 00:00:17.71672+00
Date Added: 2024-06-11T14:52:59.887049
License: Public Domain

Case: 18-11443      Document: 00515119677         Page: 1    Date Filed: 09/16/2019

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                           FILED
                                                                     September 16, 2019
                                      No. 18-11443
                                                                        Lyle W. Cayce
                                                                             Clerk
INMAR RX SOLUTIONS, INCORPORATED, doing business as Inmar;
MARK ROETEN,

               Plaintiffs - Appellants

v.

DEVOS, LIMITED, doing business as Guaranteed Returns,

               Defendant - Appellee

                   Appeal from the United States District Court
                        for the Northern District of Texas
                              USDC No. 4:18-CV-695

Before DAVIS, HO, and ENGELHARDT, Circuit Judges.
PER CURIAM:*
       Inmar Rx Solutions, Inc. (“Inmar”) and Mark Roeten (collectively with
Inmar, “Plaintiffs”) appeal the district court’s dismissal of their complaint
against Devos, Ltd., doing business as Guaranteed Returns or GRx, (“GRx”)
under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction.
For the reasons set forth, we AFFIRM.

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
    Case: 18-11443     Document: 00515119677      Page: 2    Date Filed: 09/16/2019

                                  No. 18-11443
                                         I.
      Inmar and GRx participate and compete against one another in the
reverse pharmaceutical distribution industry. 1 Inmar is a Texas company with
its principal place of business in Fort Worth, Texas. GRx is a New York
company with its principal place of business in Hollbrook, New York.
Pertinent to this matter, GRx conducts business in Texas, including online,
which requires it to maintain a license issued by the Texas Department of
State Health Services. It also employs individuals located in Texas. GRx does
not, however, have any offices in Texas.
      The present dispute pertains to the employment of customer service
representative Mark Roeten, who, at all times pertinent to this matter, has
lived in Louisiana. Roeten worked for GRx from September 2012 through April
2017 as an account executive, servicing customers in Louisiana, Alabama,
Mississippi, and, occasionally, parts of Florida.       At the beginning of his
employment     with   GRx,    Roeten    signed,   among     other   documents,    a
“Subcontractor Agreement” and a “Covenant.” These were executed in and are
expressly governed by the laws of New York. Under the terms of the Covenant,
Roeten agreed, inter alia, to refrain from in any way competing with GRx
within the continental United States for at least three years after his
employment terminated for any reason.
      Roeten resigned from GRx after GRx and two of its executive officers
were convicted in the Eastern District of Pennsylvania of various crimes
involving fraudulent activity.       In late April 2017, following Roeten’s
resignation, GRx sent a letter to Roeten in Louisiana reminding him of the
restrictive covenants in his contract with GRx. Around the same time, counsel

      1As businesses in this industry, Inmar and GRx facilitate the return of unused
pharmaceutical products for various types of pharmacies.
                                         2
    Case: 18-11443    Document: 00515119677     Page: 3   Date Filed: 09/16/2019

                                 No. 18-11443
for GRx sent a letter to counsel for Inmar in North Carolina advising that
GRx’s employees regularly execute non-compete agreements; that GRx was
aware that Inmar had solicited some of its representatives; and that Inmar
should discontinue such activity.
      Shortly thereafter, in May 2017, Roeten began working for Inmar. In
July 2018, counsel for GRx sent a letter to Inmar’s counsel in Dallas, Texas,
claiming that Inmar’s employment of Roeten violated his non-compete
agreement with GRx and demanding that Inmar terminate Roeten’s
employment within two days to avoid litigation.
      In response to the letter from GRx’s counsel, Inmar and Roeten filed a
lawsuit against GRx in the United States District Court for the Northern
District of Texas. In their complaint, Inmar and Roeten jointly asserted a
claim for tortious interference with contractual relationship and requested
declaratory relief. Roeten also individually asserted a claim for breach of
contract. GRx, in turn, filed a motion to dismiss Plaintiffs’ complaint under
Rules 12(b)(1), 12(b)(2), and/or 12(b)(6) of the Federal Rules of Civil Procedure
or, alternatively, transfer the case to the Eastern District of New York. The
district court granted GRx’s motion on the ground that it lacked personal
jurisdiction over GRx and dismissed the case pursuant to Rule 12(b)(2).
                                       II.
                                       A.
      We review a Rule 12(b)(2) dismissal for lack of personal jurisdiction de
novo. Patterson v. Aker Sols. Inc., 826 F.3d 231, 233 (5th Cir. 2016). The
plaintiff has the burden of establishing jurisdiction and may meet this burden
at the Rule 12(b)(2) stage with prima facie evidence. Id. In conducting our
review, we “must accept the plaintiff’s uncontroverted allegations, and resolve
in his favor all conflicts between the facts contained in the parties’ affidavits

                                       3
    Case: 18-11443     Document: 00515119677     Page: 4   Date Filed: 09/16/2019

                                  No. 18-11443
and other documentation.”       Id. (alteration in original omitted) (internal
quotation marks and citation omitted).
                                       B.
      “[A] federal district court’s authority to assert personal jurisdiction in
most cases is linked to service of process on a defendant who is subject to the
jurisdiction of a court of general jurisdiction in the state where the district
court is located.” Walden v. Fiore, 571 U.S. 277, 283 (2014) (quoting FED. R.
CIV. P. 4(k)(1)(A)). Thus, a federal court may exercise personal jurisdiction
over a non-resident defendant if “the forum state’s long-arm statute extends to
[such] defendant and the exercise of jurisdiction comports with due process.”
Carmona v. Leo Ship Mgmt., Inc., 924 F.3d 190, 193 (5th Cir. 2019). Since “the
Texas long-arm statute extends to the limits of federal due process, the two-
step inquiry reduces to only the federal due process analysis.” Halliburton
Energy Servs., Inc. v. Ironshore Specialty Ins. Co., 921 F.3d 522, 539 (5th Cir.
2019). To comport with federal due process, a plaintiff in a diversity case must
establish that the non-resident defendant “purposely availed himself of the
benefits and protections of the forum state by establishing minimum contacts
with the state” and that “the exercise of jurisdiction [] does not offend
traditional notions of fair play and substantial justice.” Id. (internal quotation
marks and citations omitted). Certain types of contacts support a court’s
exercise of specific jurisdiction over a non-resident defendant, while others
support exercise of general jurisdiction. Id.
      Noting that Plaintiffs did not refute GRx’s arguments that general
jurisdiction was lacking, the district court focused its jurisdictional analysis
only on whether it had specific jurisdiction over GRx. On appeal, Plaintiffs
similarly do not urge that general jurisdiction exists and challenge only the
district court’s ruling that it lacks specific jurisdiction over GRx. Accordingly,

                                        4
    Case: 18-11443     Document: 00515119677       Page: 5   Date Filed: 09/16/2019

                                  No. 18-11443
our personal jurisdiction inquiry is limited to the issue of whether the district
court properly declined to assert specific jurisdiction over GRx.
      Whether specific jurisdiction can be properly asserted over a non-
resident defendant is dependent on “the relationship among the defendant, the
forum, and the litigation.” Walden, 571 U.S. at 283–84 (internal quotation
marks and citation omitted). For the exercise of specific jurisdiction to comply
with due process, “the suit must arise out of or relate to the defendant’s
contacts with the forum.” Bristol-Myers Squibb Co. v. Super. Ct. of Cal., S.F.,
137 S. Ct. 1773, 1780 (2017) (alternations in original omitted) (internal
quotation marks and citation omitted). “In other words, there must be an
affiliation between the forum and the underlying controversy, principally, an
activity or an occurrence that takes place in the forum State and is therefore
subject to the State’s regulation.” Id. (alteration in original omitted) (internal
quotation marks and citation omitted).       Such activity or occurrence must
“create a substantial connection with the forum State.” Walden, 571 U.S. at
284. Absent this connection, “specific jurisdiction is lacking regardless of the
extent of a defendant’s unconnected activities in the State.” Bristol-Myers
Squibb Co., 137 S. Ct. at 1781. Consistent with these principles, “specific
jurisdiction is confined to adjudication of issues deriving from, or connected
with, the very controversy that establishes jurisdiction.” Id. at 1780 (internal
quotation marks and citation omitted).
      In determining whether due process allows the exercise of specific
jurisdiction, we consider the following factors:
      (1) whether the defendant has minimum contacts with the forum
      state, i.e., whether it purposely directed its activities toward the
      forum state or purposefully availed itself of the privileges of
      conducting activities there; (2) whether the plaintiff’s cause of
      action arises out of or results from the defendant’s forum-related
      contacts; and (3) whether the exercise of personal jurisdiction is
      fair and reasonable.
                                        5
     Case: 18-11443       Document: 00515119677          Page: 6     Date Filed: 09/16/2019

                                       No. 18-11443

Carmona, 924 F.3d at 193 (quoting Seiferth v. Helicopteros Atuneros, Inc., 472
F.3d 266, 271 (5th Cir. 2006)).
       Because “specific personal jurisdiction is a claim-specific inquiry,” “[a]
plaintiff bringing multiple claims that arise out of different forum contacts of
the defendant must establish specific jurisdiction for each claim.” McFadin v.
Gerber, 587 F.3d 753, 759 (5th Cir. 2009) (quoting Seiferth, 472 F.3d at 274).
If the plaintiff demonstrates satisfaction of the first two factors with respect to
each of his claims, then the burden shifts to the non-resident defendant “to
show that exercising jurisdiction would be unfair or unreasonable.” Monkton
Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 433 (5th Cir. 2014).
                                              C.
       Without specifically addressing whether the first factor for specific
jurisdiction—minimum contacts by GRx with the State of Texas—was
satisfied, the district court concluded that it could not exercise specific
jurisdiction over GRx because Plaintiffs had not established a sufficient nexus
between their claims and GRx’s Texas-related conduct and, therefore, had not
satisfied the second factor.         Given this conclusion, the district court also
declined to address the third factor for specific jurisdiction—whether the
exercise of personal jurisdiction over GRx would be fair and reasonable.
Applying the well-settled principles set forth above, we agree with the district
court’s conclusion that Roeten’s breach-of-contract claim does not arise out of
or result from GRx’s Texas-related contacts 2 and that, for this reason, the

       2 On appeal, Plaintiffs note the lack of detailed guidance in jurisprudence from the
Supreme Court or this court as to how substantial the nexus must be between a plaintiff’s
cause of action and a non-resident defendant’s forum contacts for the cause of action to “arise
out of or relate to” such contacts. They contend that in the absence of such guidance we
should formally adopt the “but-for” test announced by the Ninth Circuit in Shute v. Carnival
Cruise Lines, 897 F.2d 377, 385 (9th Cir. 1990). We conclude that the established precepts
                                              6
     Case: 18-11443       Document: 00515119677         Page: 7    Date Filed: 09/16/2019

                                      No. 18-11443
district court lacks jurisdiction over GRx as to such claim. We also agree that
the district court lacks jurisdiction over GRx as to Plaintiffs’ claims for tortious
interference and declaratory judgment but, as discussed below, clarify that, to
the extent such claims are derived from GRx’s demand letter to Inmar in
Texas, the absence of specific jurisdiction results from insufficient minimum
contacts between GRx and Texas, as opposed to an inadequate nexus between
Plaintiffs’ claims and its Texas-related contacts. We address each of Plaintiffs’
claims in turn.
                                             1.
       As noted by the district court, Roeten’s breach-of-contract claim is based
on allegations that GRx acted fraudulently in promising to pay Roeten
commissions while knowing it was engaged in a scheme to divert portions of
commissions due to its sales executives; that GRx violated express terms of
Roeten’s employment agreement requiring it to provide him with information
pertinent to his job by failing to inform him of its fraudulent scheme and the
crimes it and its executives committed; and that GRx breached the implied
covenant of good faith and fair dealing by committing criminal and fraudulent
actions and lying to Roeten. There is no indication that any of this conduct
occurred in or was directed towards Texas. 3 Nor is there any allegation that
Roeten worked in or was in any way affected by GRx’s alleged breach of
contract in Texas. Rather, the evidence submitted indicates that Roeten’s
employment contract with GRx was executed in and is governed by New York
law and that Roeten performed work for GRx only in Louisiana, Mississippi,

laid out by the Supreme Court and this court and set forth herein are sufficient for our
analysis and decline Plaintiffs’ invitation.
       3 Though Plaintiffs have vaguely asserted that Roeten was “hired” by and initially

reported to a GRx employee—Chris Ottig—who was based in New Braunfels, Texas, there is
no indication that any activity of Ottig is related to the breach of contract that Roeten now
alleges or the underlying fraud that Roeten asserts supports his breach-of-contract claim.
                                             7
    Case: 18-11443       Document: 00515119677   Page: 8   Date Filed: 09/16/2019

                                  No. 18-11443
Alabama, and Florida. While it is unclear where the alleged fraudulent and
criminal activities of GRx and its corporate officers occurred, there is no
allegation or evidence submitted suggesting that such activities occurred in
Texas. Thus, Roeten’s breach-of-contract claim does not “arise[] out of or
result[] from” any activity or occurrence involving Texas. See Carmona, 924
F.3d at 193 (quoting Seiferth, 472 F.3d at 271); see also Bristol-Myers Squibb
Co., 137 S. Ct. at 1781–82 (noting the significance in a specific jurisdiction
analysis of where the conduct giving rise to the claims occurred). Accordingly,
the district court properly declined to exercise jurisdiction over GRx with
respect to such claim.
                                        2.
      Plaintiffs’ tortious interference claim is based on the allegation that GRx
has willfully and intentionally interfered in and hindered the performance of
the valid contractual relationship between Inmar and Roeten by demanding
that Inmar terminate Roeten, and threatening litigation in the event Inmar
fails to do so. Unlike Roeten’s breach-of-contract claim, this claim does, on its
face, arise from contact by GRx with Texas—namely, the demand letter that
GRx’s counsel sent to counsel for Inmar in Texas. The question remains,
however, whether the first factor for specific jurisdiction is satisfied with
respect to Plaintiffs’ tortious interference claim—that is, whether GRx’s
demand letter qualifies as “minimum contacts” with Texas sufficient to convey
jurisdiction over GRx. Carmona, 924 F.3d at 193; see also Walden, 571 U.S. at
286 (“A forum State’s exercise of jurisdiction over an out-of-state intentional
tortfeasor must be based on intentional conduct by the defendant that creates
the necessary contacts with the forum.”) Under this court’s jurisprudence, it
is not.
      Recently, in Halliburton Energy Servs., Inc. v. Ironshore Specialty Ins.
Co., we noted the general tendency of courts to conclude that the mere sending
                                        8
    Case: 18-11443     Document: 00515119677      Page: 9   Date Filed: 09/16/2019

                                  No. 18-11443
of a cease-and-desist letter threatening litigation to a potential defendant does
not provide the minimum contact necessary to confer jurisdiction. 921 F.3d at
542. Further, we held that, in the context of that case, an indemnification
demand letter of an insurance company to a company in Texas, even if it
threatened litigation, was insufficient to establish minimum contacts with
Texas. Id. at 529, 542.
      Similarly, in Stroman Realty, Inc. v. Wercinski, we declined to find
minimum contacts sufficient for a federal district court in Texas to exercise
specific jurisdiction over the commissioner of the Arizona Department of Real
Estate based on a cease-and-desist order and follow-up letter sent by the
commissioner to a Texas company engaged in advertising and brokering
timeshare sales nationwide. 513 F.3d 476, 480–81, 484 (5th Cir. 2008). We
noted that while the commissioner had “reached out” to Texas, her
communications directed toward Texas, which cited violations of Arizona law,
asserted authority over Arizona-related business activities. Id. at 484. The
commissioner, we recognized, had not “purposefully directed her conduct at
Texas”—rather, she was “asserting nationwide authority over any real estate
transactions involving Arizona residents or property.”            Id. at 485–86.
Accordingly, she had not “expressly aim[ed] her actions at Texas.” Id. at 486
(internal quotation marks and citation omitted).
      Here, as in the cases discussed above, GRx did not “purposely avail[]
[it]self of the benefits and protections of [Texas]” by sending a letter to Inmar’s
counsel in Texas demanding that it terminate Roeten’s employment.              See
Halliburton Energy Servs., Inc., 921 F.3d at 539 (internal quotation marks and
citation omitted). While GRx was engaged in commercial activity in the forum,
unlike the non-resident defendant in Stroman Realty, Inc., GRx’s letter, like
the correspondence in Stroman Realty, Inc., was the result of a non-resident
defendant attempting to demand compliance with a restriction that would
                                        9
   Case: 18-11443     Document: 00515119677      Page: 10   Date Filed: 09/16/2019

                                  No. 18-11443
have applied no matter where the plaintiff was located across the country. See
513 F.3d at 480–81. Further, the activity that GRx attempted to regulate by
its letter was employment activity of Roeten occurring outside of Texas, since
Roeten—a Louisiana resident—performed his job duties for Inmar only in
Louisiana, Mississippi, Alabama and Florida. In light of the foregoing, with
respect to Plaintiffs’ tortious interference claim, we conclude that GRx could
not reasonably have anticipated being haled into court in Texas as a result of
its relevant Texas-related contacts and, therefore, did not create minimum
contacts with Texas sufficient to allow for the exercise of specific jurisdiction
over it as to such claim. See Halliburton Energy Servs., Inc., 921 F.3d at 539;
see also Walden, 571 U.S. at 285 (“[O]ur ‘minimum contacts’ analysis looks to
the defendant’s contacts with the forum State itself, not the defendant’s
contacts with persons who reside there.”) Accordingly, although we somewhat
disagree with the reasoning of the district court, its conclusion that it lacked
specific jurisdiction over GRx with respect to Plaintiffs’ tortious interference
claim was not in error.
                                        3.
      With respect to Plaintiffs’ request for declaratory relief, they assert that,
in light of GRx’s demand letter to Inmar, justiciable controversies exist
between GRx and Roeten regarding the enforceability of the non-compete
provisions in Roeten’s Covenant with GRx and between GRx and Inmar
regarding any liability Inmar may have for employing Roeten despite such
provisions.   Consequently, they seek a declaratory judgment that any
restrictive covenants agreed to by Roeten in his employment contract with GRx
are unenforceable and that Inmar cannot be held liable for employing Roeten.
These requests are dependent upon interpretation of Roeten’s contract with
GRx and the merits of his breach-of-contract claim, and also stem from the
demand letter sent by GRx to Inmar. For the reasons discussed above, Roeten’s
                                       10
   Case: 18-11443    Document: 00515119677      Page: 11   Date Filed: 09/16/2019

                                 No. 18-11443
breach-of-contract claim does not arise out of or relate to contacts by GRx with
Texas, and GRx’s demand letter to Inmar did not form sufficient minimum
contacts with Texas for the exercise of specific jurisdiction. Therefore, we
conclude that the district court’s abstention from exercising jurisdiction over
Plaintiffs’ declaratory judgment claim was also appropriate.      See Carmona,
924 F.3d at 193.
                                      III.
      For the reasons set forth above, we hold that the district court lacks
jurisdiction over GRx with respect to the claims asserted by Plaintiffs in this
matter and, therefore, AFFIRM the district court’s dismissal of such claims
pursuant to Federal Rule of Civil Procedure 12(b)(2).

                                      11