Court Opinion

ID: 9410722
Source: CourtListenerOpinion
Date Created: 2023-07-24 05:01:35.519759+00
Date Added: 2024-06-11T17:20:59.968838
License: Public Domain

In the

    United States Court of Appeals
                 For the Seventh Circuit
                     ____________________
No. 17-2620
GERALD D. W. NORTH,
                                                  Plaintiff-Appellant,
                                 v.

UBIQUITY, INC., a Nevada Corporation, f/k/a, UBIQUITY
BROADCAST CORPORATION, a Delaware Corporation, f/k/a
UBIQUITY HOLDING INC., a Delaware Corporation,
                                          Defendant-Appellee.
                     ____________________

         Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
            No. 1:16-cv-5698 — Elaine E. Bucklo, Judge.
                     ____________________

       ARGUED MAY 31, 2023 — DECIDED JUNE 26, 2023
                ____________________

   Before ROVNER, HAMILTON, and SCUDDER, Circuit Judges.
    SCUDDER, Circuit Judge. For the better part of a decade Ger-
ald North and Ubiquity, Inc. have been at loggerheads over
the alleged breach of a 2006 contract. After litigating for sev-
eral years in Arizona state court, North filed a second lawsuit
alleging the exact same breach of contract—this time in a fed-
eral district court in Illinois. But the parties’ only connection
2                                                  No. 17-2620

to Illinois was the 2006 contract, which Ubiquity signed with
North’s former Chicago-based firm, North & Associates, ra-
ther than with North himself. The district court concluded
that the contract alone was insufficient to establish personal
jurisdiction over Ubiquity, so it dismissed the case. We agree.
    In North’s view, though, that should not be the end of the
story. Invoking 28 U.S.C. § 1631, he contends the district court
ought to have considered transferring the case to the Central
District of California (which would have had general personal
jurisdiction over Ubiquity, a California firm) instead of dis-
missing it outright. North is correct that the district court
should have at least considered transfer before dismissing the
action for lack of personal jurisdiction. But North’s own rep-
resentations before the district court would have fatally un-
dermined his request that the court transfer the case. We
therefore see no reason to remand for further analysis, so we
affirm the district court’s judgment for Ubiquity.
                               I
                               A
    In 2006 Ubiquity, an upstart telecommunications com-
pany based in southern California, sought to expand its busi-
ness nationwide. It approached Gerald North, a retired anti-
trust and patent lawyer, in its effort to connect with strategic
partners in the telecommunications industry. Ubiquity ulti-
mately entered into a contract with North’s Illinois firm,
North & Associates, in which North agreed to connect Ubiq-
uity to some of his own industry contacts. North executed the
contract in Arizona, where he lived, on behalf of his firm.
    Part of the contract involved Ubiquity promising to trans-
fer 1.5% of its outstanding shares to North & Associates as a
No. 17-2620                                                   3

“commencement fee”—an equity award that would be paid
regardless of how long the partnership between them lasted.
As it turned out, their affiliation proved short-lived. Ubiquity
terminated the agreement in February 2007, only two months
after signing the contract. At that time Ubiquity had not yet
transferred its shares to North & Associates. It never did.
    At first North did nothing to attempt to enforce the con-
tract. For several years he thought he could not recover any
damages because Ubiquity stock was not yet worth anything.
That all changed in 2013 when Ubiquity went public. Recog-
nizing the newfound value of the equity Ubiquity had prom-
ised, North sent a letter demanding specific performance on
the contract in February 2014. Ubiquity refused to issue North
any shares. So in June 2014 North sued Ubiquity for breach of
contract in Arizona state court.
    The prolonged (and still ongoing) Arizona litigation pro-
duced a litany of motions, affidavits, and declarations from
both sides of the dispute. Ubiquity sought to dismiss the Ari-
zona lawsuit, asserting that because North & Associates—the
signatory to the contract—was based in Illinois, Arizona
courts lacked personal jurisdiction over claims arising from
the contract. North responded by emphasizing the lawsuit’s
ties to Arizona, including the fact that North negotiated and
executed the contract there.
                               B
    The Arizona court ultimately denied Ubiquity’s motion to
dismiss for lack of personal jurisdiction. Yet North, worried
about potential reversal on appeal, wanted to safeguard his
interests. So he filed an identical breach-of-contract claim in
the Northern District of Illinois in May 2016.
4                                                   No. 17-2620

    By that point Ubiquity was facing unrelated legal troubles
and failed to appear in Illinois district court to defend itself.
In October 2016 the district court entered a default judgment
against Ubiquity totaling over $7 million—the August 2014
resale value of the shares that North & Associates would have
been entitled to receive under the contract. The judgment led
to a lien on Ubiquity’s assets in March 2017, and two weeks
after the lien went into effect, Ubiquity filed a Rule 60(b)(4)
motion to vacate the default judgment and dismiss the case
for lack of personal jurisdiction.
    The district court agreed with Ubiquity and granted its
Rule 60(b)(4) motion. The district court clearly and concisely
explained that Ubiquity’s only connection to Illinois was that
it had contracted with North & Associates, an Illinois entity.
The district court further underscored that North, by his own
admissions, had negotiated, executed, and promised to per-
form on the contract in Arizona, not Illinois. In the end, the
district court concluded that there were not sufficient contacts
between Ubiquity and Illinois, vacated the default judgment,
and dismissed the case for lack of personal jurisdiction. Nei-
ther North nor Ubiquity ever requested that the district court
transfer the case to any other forum, and the court did not on
its own consider whether transfer would be appropriate.
   The district court entered its order on July 10, 2017, and
North filed a timely notice of appeal on August 9. Then, on
October 31, he sought a stay of the proceedings in our court
while his original litigation in Arizona state court went for-
ward. That stay remained in effect for over five years—until
January 2023—by which point North’s contract claim would
have been time-barred in every relevant jurisdiction.
No. 17-2620                                                    5

                               II
    We begin with the district court’s determination that it
lacked personal jurisdiction over Ubiquity. Because the dis-
trict court made its determination “on the submission of writ-
ten materials, without the benefit of an evidentiary hearing,”
North needed only to “make out a prima facie case of personal
jurisdiction.” Purdue Rsch. Found. v. Sanofi-Synthelabo, S.A.,
338 F.3d 773, 782 (7th Cir. 2003) (quoting Hyatt Int’l Corp. v.
Coco, 302 F.3d 707, 713 (7th Cir. 2002)). He has not done so.
                               A
    The Supreme Court has long made clear that the question
of personal jurisdiction hinges on the defendant’s—not the
plaintiff’s—contacts with the forum state. See Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (“Historically the jurisdic-
tion of courts to render judgment in personam is grounded on
their de facto power over the defendant’s person.”). If an in-
dividual resides in a state, or if a corporation is incorporated
or has its primary place of business in a state, then the courts
of that state have general personal jurisdiction over any law-
suit against that individual or corporation. See id. at 316–17.
Otherwise the question becomes whether the facts of the case
at hand establish specific personal jurisdiction—or, to use the
Supreme Court’s terminology, whether there were “‘mini-
mum contacts’ between the defendant and the forum State.”
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291
(1980) (quoting International Shoe, 326 U.S. at 316). There is no
question that Ubiquity is not incorporated in Illinois, nor does
it have its primary place of business there. That means our
focus is not on general but instead on specific personal
jurisdiction.
6                                                     No. 17-2620

     Minimum contacts exist—and specific personal jurisdic-
tion is established—when “the defendant has ‘purposefully
directed’ his activities at residents of the forum and the litiga-
tion results from alleged injuries that ‘arise out of or relate to’
those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462,
472–73 (1985) (first quoting Keeton v. Hustler Magazine, Inc.,
465 U.S. 770, 774 (1984), and then quoting Helicopteros Nacion-
ales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). Corpo-
rations that “reach out beyond one state and create continuing
relationships and obligations with citizens of another state”
are subject to personal jurisdiction in the latter state. Id. at 473
(quoting Travelers Health Ass’n v. Virginia, 339 U.S. 643, 647
(1950)). In those circumstances, the defendant has “manifestly
[ ] availed himself of the privilege of conducting business” in
the forum state, so “it is presumptively not unreasonable to
require him to submit to the burdens of litigation in that fo-
rum as well.” Id. at 476.
    But a defendant’s “‘random,’ ‘fortuitous,’ or ‘attenuated’
contacts” with a state are not enough to establish personal ju-
risdiction. Id. at 475 (quoting Keeton, 465 U.S. at 774, and
World-Wide Volkswagen, 444 U.S. at 299). “[A]n individual’s
contract with an out-of-state party alone,” the Supreme Court
has stressed, cannot “automatically establish sufficient mini-
mum contacts in the other party’s home forum.” Id. at 478
(emphasis in original). In those instances courts should in-
stead take “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 transac-
tion.’” Id. at 479 (quoting Hoopeston Canning Co. v. Cullen, 318
U.S. 313, 316–17 (1943)). So a proper personal jurisdiction in-
quiry considers “prior negotiations and contemplated future
No. 17-2620                                                     7

consequences, along with the terms of the contract and the
parties’ actual course of dealing,” instead of starting and end-
ing with the mere existence of a contract. Id.
                                B
   The district court applied these exact principles, and its
analysis was spot-on.
    Because personal jurisdiction is all about the defendant’s
contacts with the forum state, North had to show that Ubiq-
uity had purposely directed its activities at Illinois and at its
residents. He failed to do so—indeed, his complaint failed to
make even a threshold, or prima facie, showing of personal ju-
risdiction. See Purdue Research, 338 F.3d at 782. This makes the
procedural posture of Ubiquity’s Rule 60(b)(4) challenge to
personal jurisdiction (and related questions about the parties’
burdens) irrelevant to our analysis.
    North’s main argument for why Illinois courts have per-
sonal jurisdiction over Ubiquity is that Ubiquity signed a con-
tract with North & Associates, an Illinois firm. But Burger King
makes clear that such a contract, by itself, does not establish
specific personal jurisdiction. See also id. (“[C]ontracting with
an out-of-state party alone cannot establish automatically
minimum contacts in the other party’s home forum.”).
    So North needs something more. His only fallback is an
assertion in his appellate brief that Ubiquity intended to avail
itself of North & Associates’ Illinois-based contacts—but this
naked contention lacks support in the record. Indeed, as the
district court observed, North’s own statements “thoroughly
undercut[ ] his assertion of jurisdiction” in Illinois. In the Ar-
izona litigation North himself emphasized that he and Ubiq-
uity negotiated and executed the contract in Arizona, and he
8                                                       No. 17-2620

even stated that he would perform on the contract “in or from
Arizona.” Like the district court, we see nothing in the record
supporting a conclusion that Ubiquity purposely availed it-
self of Illinois law when it contracted with North’s firm.
    All this goes to show that North failed to establish that Il-
linois courts have personal jurisdiction over Ubiquity. We
therefore affirm the district court and commend its analysis
as a model of clarity.
                                 III
    Perhaps sensing that the district court got the personal ju-
risdiction question right, North focuses his efforts elsewhere
on appeal. He insists that even if the district court correctly
found that personal jurisdiction was lacking, it should not
have dismissed his case so quickly and instead shouldered an
affirmative obligation to transfer the case to another venue—
in particular, the Central District of California. Although
North’s arguments on this front merit our close attention,
they ultimately do not warrant remand.
                                 A
    We start with 28 U.S.C. § 1631, which provides that when-
ever a “court finds that there is a want of jurisdiction, the
court shall, if it is in the interest of justice, transfer such action
or appeal to any other [ ] court … in which the action or ap-
peal could have been brought at the time it was filed or no-
ticed.” North contends that § 1631, by its terms, required the
district court, upon concluding that personal jurisdiction was
lacking in Illinois, to transfer his case to the Central District of
California. Everyone agrees, he explains, that California
courts would have general personal jurisdiction over
Ubiquity.
No. 17-2620                                                     9

    Ubiquity challenges North’s transfer arguments on sev-
eral fronts: First, Ubiquity questions whether the term “juris-
diction” in § 1631 encompasses personal jurisdiction or means
subject matter jurisdiction only. Second, Ubiquity highlights
that North never moved for venue transfer before the district
court, so it says North waived any request to transfer. Third,
Ubiquity contends that—even if North did not waive transfer
and § 1631 applies when personal jurisdiction is lacking—the
interests of justice do not require transfer in this case.
       1. The Meaning of “Jurisdiction” in 28 U.S.C.
          § 1631
    We see every reason to conclude that § 1631’s reference to
“jurisdiction” includes both subject matter and personal juris-
diction. The statute’s plain language does not constrain itself
to subject matter or personal jurisdiction; it speaks only of “a
want of jurisdiction.” The term “jurisdiction,” when used
without qualification, normally encompasses both subject
matter and personal jurisdiction. See Jurisdiction, Black’s Law
Dictionary (11th ed. 2019); see also Want of Jurisdiction, Black’s
Law Dictionary (11th ed. 2019). Nothing in § 1631 suggests that
Congress intended the term “jurisdiction” to carry a different,
more limited meaning.
    This conclusion also aligns with common sense. It is easy
to see how a lack of personal jurisdiction—based as it is on a
specific state’s authority over the defendant—could be cured
by transfer to another court. It is comparatively uncommon
(though not entirely unheard of) that a lack of subject matter
jurisdiction would be cured by transfer. See In re IMMC Corp.,
909 F.3d 589, 596 (3d Cir. 2018) (explaining that, while statu-
tory limits on subject matter jurisdiction can at times be
10                                                  No. 17-2620

avoided by transfer to another federal forum, constitutional
limits on subject matter jurisdiction cannot be so avoided).
   Furthermore, every circuit court to address this issue has
agreed that § 1631’s reference to “jurisdiction” encompasses
personal jurisdiction as well as subject matter jurisdiction.
See, e.g., Franco v. Mabe Trucking Co., 3 F.4th 788, 792–95 (5th
Cir. 2021) (reaching this conclusion and collecting cases in
agreement from the First, Third, Sixth, Eighth, Ninth, Tenth,
and Eleventh Circuits).
  We too have little difficulty concluding that § 1631 applies
when either subject matter or personal jurisdiction is lacking,
meaning it could apply to North’s lawsuit here.
       2. Waiver of § 1631 Transfer
   When North responded to Ubiquity’s challenge to per-
sonal jurisdiction in the district court, he did not at any point
suggest that transfer to the Central District of California—or
any other district, for that matter—would be appropriate or
desirable. Neither did North respond to the district court’s
dismissal with a motion for reconsideration seeking transfer.
On this record, Ubiquity invites us to conclude that North’s
inaction amounts to waiver, such that North cannot raise
transfer-related arguments on appeal.
   North disagrees. He reads § 1631 to impose an independ-
ent and affirmative obligation on district courts to consider
whether transfer would be appropriate irrespective of
whether a party requests transfer. On this view, North could
not have waived his request for transfer under § 1631.
   While the issue presented is new for us, other circuits have
addressed it, and their analyses provide important guidance.
In particular, we are convinced by the analysis in Danziger &
No. 17-2620                                                    11

De Llano, LLP v. Morgan Verkamp LLC, 948 F.3d 124 (3d Cir.
2020). The court focused in the first instance on the text of
§ 1631: “The relevant statute provides that the district court
‘shall’ transfer the case rather than dismiss it ‘if [doing so] is
in the interest of justice.’” Id. at 132 (alteration in original)
(quoting 28 U.S.C. § 1631). The statute’s plain text yields a
plain conclusion: “a district court that lacks personal jurisdic-
tion must at least consider a transfer” and “make some find-
ings under § 1631.” Id.
    This approach makes sound sense, as many litigants who
would likely benefit from § 1631 are pro se or otherwise unfa-
miliar with the several venue-transfer statutes in the U.S.
Code. See Phillips v. Seiter, 173 F.3d 609, 610 (7th Cir. 1999)
(observing that statutes of limitations, which are avoidable by
§ 1631 transfer from a timely lawsuit, are “likely to be partic-
ularly acute in prisoner cases, since prisoners do not have
lawyers”); see also Paul v. INS, 348 F.3d 43, 47 (2d Cir. 2003)
(Sotomayor, J.) (explaining that “Congress intended [§ 1631]
to aid litigants who were confused as to the proper forum for
review”). Such litigants may not know to file a § 1631 motion,
or they might confuse it with a motion to transfer under a dif-
ferent statute, such as § 1404(a) or § 1406(a).
    Other circuits have taken the same approach. See Cruz-
Aguilera v. INS, 245 F.3d 1070, 1074 (9th Cir. 2001) (“Because
the statute’s language is mandatory, federal courts should
consider transfer without motion by the parties.”); see also
USPPS, Ltd. v. Avery Dennison Corp., 647 F.3d 274, 277 (5th Cir.
2011) (transferring an appeal to the Federal Circuit under
§ 1631 even though neither party requested transfer). And alt-
hough we have not yet definitively ruled on whether district
courts bear an affirmative obligation to consider transfer, we
12                                                  No. 17-2620

too have made clear that district courts can transfer a case
“even if not asked to do so by either party.” Phillips, 173 F.3d
at 610.
   We therefore conclude that when federal courts find that
they lack jurisdiction, they bear an independent obligation
under § 1631 to consider whether to transfer the case—even if
neither party requests transfer. As we explain next, however,
that obligation is quite limited, and it is rare that a court’s
oversight will amount to reversible error.
       3. The Interest of Justice
    We finally come to the heart of North’s argument—that
transfer of this case to the Central District of California would
have been in the interest of justice, as required by § 1631. But
this is where North’s failure to seek transfer in the district
court comes back to bite him. He did nothing to develop a
record that would support his claim that transfer would be in
the interest of justice, so any error the district court may have
made by not considering transfer is not grounds for remand.
See Phillips, 173 F.3d at 611.
    The record that North did develop undermines his argu-
ment that transfer would be in the interest of justice. Indeed,
it points in the opposite direction. We explained in Phillips
that a “compelling reason for transfer is that the plaintiff,
whose case if transferred is for statute of limitations purposes
deemed by section 1631 to have been filed in the transferor
court, will be time-barred if his case is dismissed and thus has
to be filed anew in the right court.” Id. at 610 (citations omit-
ted). But North expressly represented to the district court that
he could refile his case in California up until February 2018—
seven months after the district court dismissed his Illinois
No. 17-2620                                                     13

lawsuit. And the inverse of what we said in Phillips is also
true: “If a plaintiff may, on its own, refile its case in a proper
forum, ‘the interests of justice’ do not demand transfer.” Dan-
ziger & De Llano, 948 F.3d at 133.
   By North’s own representations he had seven months
within which to refile his case in the Central District of Cali-
fornia—a proper forum. Yet he stood still. He did not refile or
even move ahead with his appeal in our court, instead re-
questing a stay that remained in place for over five years.
    North’s failure to refile his case in a proper forum does not
change the interests of justice. We therefore see no reason to
remand this case to the district court to determine whether
transfer would have been required in the interest of justice.
It would not have.
                                B
    In addition to his contention that the district court should
have transferred his case under § 1631, North also points to
another venue-transfer statute, 28 U.S.C. § 1404(a), that he
says should have provided grounds to transfer his case. But
§ 1404(a), like § 1631, gives district courts authority to transfer
if doing so is “in the interest of justice.” Because the interests
of justice do not require transfer under § 1631, they do not un-
der § 1404(a) either.
   For these reasons we AFFIRM.