Court Opinion

ID: 9845984
Source: CourtListenerOpinion
Date Created: 2023-09-24 03:32:23.625949+00
Date Added: 2024-06-11T09:16:30.596224
License: Public Domain

ROGERS, Circuit Judge,
dissenting in part.
Because there is not personal jurisdiction over Ferrostaal on SunCoke’s claim for breach of the 2001 contract, I would uphold the dismissal of that claim. Under Nationwide Mutual Insurance Co. v. Tryg International Insurance Co., 91 F.3d 790, 796 (6th Cir.1996), the parties’ settlement negotiations cannot be used as a contact to establish personal jurisdiction on the 2001 contract. Without that contact, there is insufficient connection to the forum on that claim and it should be dismissed for want of jurisdiction.
There is not personal jurisdiction over Ferrostaal on one of SunCoke’s claims, and “[pjersonal jurisdiction ... must be proper as to each claim.” Jack H. Friedenthal, et al., Civil Procedure § 6.6, at 368 (4th ed.2005); see also, e.g., Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 274-75 (5th Cir.2006); Remick v. Manfredy, 238 F.3d 248, 255-56 (3d Cir.2001); Phillips Exeter Acad. v. Howard Phillips *220Fund, 196 F.3d 284, 289 (1st Cir.1999). SunCoke brought two claims: breach of the 2001 contract and breach of the 2005 settlement contract. There is only personal jurisdiction over Ferrostaal on the latter.
There is personal jurisdiction on the 2005 settlement contract claim because Ferrostaal’s “negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing,” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), establish minimum contacts with Tennessee. By coming to Tennessee to negotiate, Ferrostaal “purposefully directed” its activities toward Tennessee residents, “and the litigation resulted] from alleged injuries that arise out of or relate to those activities.” Burger King, 471 U.S. at 473, 105 S.Ct. 2174 (citations and internal quotations omitted). Ferrostaal’s activity in the state was not “random” or “fortuitous,” Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984), nor was the travel to Tennessee a “jurisdictional trap,” as described in Minnesota Mining & Manufacturing Co. v. Nippon Carbide Industries Co., 63 F.3d 694, 698 (8th Cir.1995). The settlement contract contemplated future consequences relevant to Tennessee: Ferrostaal agreed to allow SunCoke representatives to travel from Tennessee to Ferrostaal offices to investigate the alleged misappropriation of confidential information. Parties who “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.” Burger King, 471 U.S. at 473, 105 S.Ct. 2174 (citation and internal quotations omitted).
There are not, however, minimum contacts to establish personal jurisdiction over Ferrostaal on the 2001 contract claim. The settlement negotiations are a contact only for the purposes of the settlement contract itself1 — Nationwide precludes using the negotiations as a contact to establish personal jurisdiction on a claim for the original 2001 contract. 91 F.3d at 796; see also Iowa Elec. Light & Power Co. v. Atlas Corp., 603 F.2d 1301, 1302 n. 2 (8th Cir.1979); Erlanger Mills, Inc. v. Cohoes Fibre Mills, Inc., 239 F.2d 502, 508-09 (4th Cir.1956). Ferrostaal’s other contacts with Tennessee are not sufficient to warrant jurisdiction under Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir.1968).
First, Ferrostaal did not purposefully avail itself of the privilege of acting in Tennessee, as required by Southern Machine, 401 F.2d at 381. Connection to Tennessee is minimal: The 2001 contract was negotiated in Florida and the contract dealt with services in Brazil. In 2002, Ferrostaal employees visited Sun-Coke’s Tennessee offices for one day to discuss the project in Brazil. The parties arranged the trip via telephone, email, and facsimile. Ferrostaal electronically accessed information on SunCoke’s website (maintained in Tennessee) via a remote server in Texas. The breach occurred in Brazil, where Ferrostaal allegedly misappropriated SunCoke’s intellectual property. Of these contacts, the 2002 visit provides the strongest connection to Tennessee, and the trip lasted one day and concerned actions in Brazil. The communications between the parties *221add little weight as “the only reason the communications ... were directed [at the forum] was that [plaintiff] found it convenient to be present there.” Int’l Techs. Consultants, Inc. v. Euroglas S.A., 107 F.3d 386, 395 (6th Cir.1997). The absence of other contacts is notable: Ferrostaal is not licensed to operate in Tennessee, provides no services there, and maintains no offices or property there. These contacts did not provide a “substantial connection” with Tennessee that creates a reasonable anticipation of being “haled into court there.” Burger King, 471 U.S. at 474-75, 105 S.Ct. 2174 (citation omitted).
Second, the 2001 contract claim did not arise from Ferrostaal’s actions in the forum state, as considered in Southern Machine, 401 F.2d at 381. “[T]he operative facts of the controversy,” CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1267 (6th Cir.1996), occurred in Brazil when Ferrostaal supposedly misappropriated confidential information. The claim did not arise from contacts with Tennessee, nor did it have “substantial connection with the defendant’s in-state activities.” Southern Machine, 401 F.2d at 384 n. 27.
Third, the exercise of jurisdiction is not reasonable, the final element of the Southern Machine test, 401 F.2d at 381, because of the insubstantial connection between Ferrostaal and Tennessee. Where international defendants are involved, courts must “exercise restraint in extending our notions of personal jurisdiction into the international field.” Int’l Techs., 107 F.3d at 388. Extensions of jurisdiction may harm the forum by discouraging international investment. See id. at 394. Ferrostaal structured this contract to avoid jurisdiction in Tennessee and a subsequent contract between the parties should not undo that choice.
SunCoke cannot ride the 2001 contract claim into court on the coattails of the 2005 settlement contract claim. Such “pendent personal jurisdiction” has been sparingly permitted in federal diversity cases,2 and the district court has discretion whether or not to exercise it, Oetiker v. Jurid Werke, G. m. b. H., 556 F.2d 1, 5 (D.C.Cir.1977). Application of the doctrine requires a common nucleus of operative fact between the claims, see, e.g., United States v. Botefuhr, 309 F.3d 1263, 1272 (10th Cir.2002), but there is not a common nucleus here. Sun-Coke’s claims are factually distinct: For the 2001 contract claim, SunCoke must show that Ferrostaal misappropriated confidential documents in Brazil, constituting a breach. For the 2005 settlement contract claim, SunCoke must show that there was a settlement contract, that one of the terms of the contract guaranteed that multiple SunCoke employees could visit Ferrostaal’s headquarters, and that Ferrostaal’s actions repudiated the agreement, constituting a breach. Trial efficiency is not necessarily aided by trying these two claims together, because they arise out of separate occurrences. Regardless, even if these claims did arise from a common nucleus, the proper course of action would be to remand to the district court so that it may, in its discretion, “decide whether to retain or dismiss” the pendent claims. Action Embroidery, 368 F.3d at 1181.
Prudential concerns for efficiency should not overwhelm the larger policy issues that arise if personal jurisdiction is found here. If the parties had not reached a settlement agreement, Nationwide would preclude us*222ing the settlement talks as a contact for personal jurisdiction. The successful creation of a settlement agreement should not eviscerate this holding, as it would create a disincentive to settle. Furthermore, because it is unclear whether a settlement contract was formed, the 2005 settlement contract claim could be dismissed. If that occurs, Ferrostaal would be in federal court only on the 2001 contract claim, over which there is no personal jurisdiction. Such precedent creates an opportunity for gamesmanship by future plaintiffs, who could always assert a “settlement contract” in their complaint. That result would gut the holding of Nationwide.
The 2001 contract claim should be dismissed for lack of personal jurisdiction and the case remanded to the district court to determine whether the 2005 settlement contract claim alone satisfies the amount-in-controversy requirement.

. In considering settlement contacts, the Eighth Circuit in Minnesota Mining & Manufacturing Co., 63 F.3d at 698, explicitly distinguished cases where the suit was over the underlying contract that the parties were trying to settle as opposed to a suit over a resulting settlement contract.

. "Pendent personal jurisdiction is typically found where one or more federal claims for which there is nationwide personal jurisdiction are combined in the same suit with one or more state or federal claims for which there is not nationwide personal jurisdiction.” Action Embroidery Corp. v. Atl. Embroidery, Inc., 368 F.3d 1174, 1180-81 (9th Cir.2004).