Lead Opinion
Luv n’ care, Ltd. (“Luv n’ care”), a Louisiana corporation, appeals the dismissal of its suit against Insta-Mix, Inc., and several related entities (collectively “Insta-Mix”), citizens of Colorado, for lack of personal jurisdiction. We reverse and remand.
I.
Luv n’ care is an international corporation based in Monroe, Louisiana, that specializes in the design, manufacture, and sale of a variety of infant care products. Insta-Mix is a small Colorado corporation that holds the patent on a two-chambered plastic bottle with a freezable core, for use by both athletes and children. The design of the straw cap of Insta-Mix’s bottle allegedly bears resemblance to a bottle cap produced by Luv n’ care.
Insta-Mix has sold 82,224 of its patented bottles to Wal-Mart and a few other vendors. Although Wal-Mart resells the product at its retail locations, Insta-Mix does not ship the product directly to Wal-Mart stores but, instead, trucks or third-party carriers assigned by Wal-Mart transport the bottles from Insta-Mix’s dock in Colorado Springs to one of twenty-six distribution centers nationwide.
The vendor agreement that gives Wal-Mart the right to purchase and retail these bottles indicates that Wal-Mart assumes ownership of the bottles when they are loaded in Colorado Springs. The agreement also mentions several possible distribution centers, but none in Louisiana. Wal-Mart transported 3,696 copies of the bottle, or approximately 65 shipments, with total revenue to Insta-Mix of $8,923.20, to its distribution center in Opel-ousas, Louisiana.
Insta-Mix received and filled purchase orders from Wal-Mart via an “Electronic Data Interchange” (“EDI”) system, which contains information regarding the price, quantity, and destination of each shipment. Once an order is filled, the EDI system automatically sends to Wal-Mart an electronic invoice that contains the letterhead of an Insta-Mix-related entity and the destination address.
The record contains several invoices with a “send to” location of the Wal-Mart distribution center in Opelousas. Insta-Mix alleges that it had no knowledge of the destination of the products until it printed out information from the EDI system in response to a discovery request in this litigation. It appears that eventually some of Insta-Mix’s bottles reached Wal-Mart stores in Louisiana, repackaged under the Wal-Mart trade name.
It is undisputed that Insta-Mix has no employees or agent for service of process in Louisiana and conducts no direct sales or marketing there. Rather, its only contact with Louisiana is its sales of items to Wal-Mart.
II.
Luv n’ care sued Insta-Mix for copyright infringement, 17 U.S.C. § 101 et seq., and trademark dilution and unfair competition under the Lanham Act, 15 U.S.C. §§ 1125(a)(1)(A) and (B). Insta-Mix moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) and (3) for lack of personal jurisdiction and improper venue.
The magistrate judge issued a recommendation that the suit be dismissed because “[sjimply placing [a] product in the stream of commerce is not sufficient to create personal jurisdiction even if it were
III.
We review de novo a district court’s determination that it lacks personal jurisdiction over a non-resident defendant. Adams v. Unione Mediterranea Di Sicurta,
The Due Process Clause of the Fourteenth Amendment guarantees that no federal court may assume jurisdiction in personam of a non-resident defendant unless the defendant has meaningful “contacts, ties, or relations” with the forum state. Int'l Shoe Co. v. Washington,
A federal court may satisfy the constitutional requirements for specific jurisdiction by a showing that the defendant has “minimum contacts” with the forum state such that imposing a judgment would not “offend traditional notions of fair play and substantial justice.” Int'l Shoe,
A.
To determine whether Insta-Mix has “minimum contacts” with Louisiana, we must identify some act whereby it “purposely avail[ed] itself of the privilege of
The district court erred in holding that placing a product into the stream of commerce, at least where the defendant knows the product will ultimately reach the forum state, does not rise to the level of “purposeful availment.” This court has consistently held that “mere foreseeability or awareness [is] a constitutionally sufficient basis for personal jurisdiction if the defendant’s product made its way into the forum state while still in the stream of commerce.”
Where a defendant knowingly benefits from the availability of a particular state’s market for its products, it is only fitting that the defendant be amenable to suit in that state.
Insta-Mix maintains that Wal-Mart had complete control over the ultimate destination of its goods once they left the warehouse in Colorado Springs and that Wal-Mart could even make a midstream decision to re-route the goods to other distribution centers not listed on the invoices. A “unilateral decision to take a chattel ... to a distant State” does not suffice to confer jurisdiction. World Wide Volkswagen,
Insta-Mix claims that its employees had no actual knowledge of the intended destination of its goods until it consulted the EDI system in preparation for this litigation. This claim is implausible and could not defeat jurisdiction even if true. It is eminently foreseeable that Insta-Mix’s products would reach the market indicated on the company’s invoices. In fact, Insta-Mix derived substantial revenue (about 4.5% of its total distribution) from its sale of thousands of units bound for Opelousas.
Finally, Insta-Mix argues that it has structured its primary conduct to avoid jurisdiction by including in the vendor agreement a condition that transfers ownership from Insta-Mix.to Wal-Mart at the time that Wal-Mart receives its shipments in Colorado Springs. Jurisdiction, however, “does not depend on the technicalities of when title passes;” rather, jurisdiction may attach both to manufacturers who supply their own delivery systems and to those that make use of the distribution systems of third parties. Oswalt,
In the interest of promoting that “degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit,” World Wide Volkswagen,
B.
It is not enough to satisfy due process that Insta-Mix has some “minimum contacts” with Louisiana. Rather, the underlying cause of action must “arise out of’ the defendant’s contacts with the forum state.
“[T]his court has been reluctant to extend the stream-of-commerce principle outside the context of products liability cases,” including cases involving “contract or copyright.” Nuovo Pignone,
In Nuovo Pignone, the defendant Fagio-li, an Italian shipper, allegedly damaged plaintiffs cargo with a defective onboard shipping crane while docking and unloading at a Louisiana port. We found jurisdiction even though Fagioli, like Insta-Mix, employed third-party intermediaries at the point of injury, i.e., the unloading dock. We further opined that Fagioli should have considered the possible damage that a defective crane aboard its vessel would cause in the forum state. Similarly, Insta-Mix should have known, when it availed itself of the Louisiana market for infant care products, that it could face potential liability from competitors with similarly-designed items.
The closest analogue to the present case is Ham v. La Cienega Music Co.,
Luv n’ care claims infringement from the same bottle that traveled through the stream of commerce from Colorado to Louisiana. This connection between the allegedly infringing product and the forum state is sufficient to confer personal jurisdiction.
C.
It remains for us to inquire whether the exercise of jurisdiction would “offend traditional notions of fair play and substantial justice.” International Shoe,
Insta-Mix relies primarily on the third and fourth elements, arguing that Luv n’ care has not named Wal-Mart, the retailer, nor Royal King, the alleged manufacturer of the bottle top, as the more natural defendants. Nor can the district
If Luv n’ care’s suit is indeed frivolous, the district court presumably will deal with that deficiency. But, where a product allegedly causes economic injury in Louisiana, it is in the interest of that state to have its courts mediate the dispute. Furthermore, it is not unreasonable to ask Insta-Mix to defend in Louisiana, where the company avails itself of the benefit of that state’s market for thousands of iterations of its product. The forum state (Louisiana) and the plaintiff (Luv n’ care, which is organized under Louisiana law and based there) obviously have some legitimate interest in' litigating this matter in Louisiana, where there has been regular distribution of a number of the allegedly offending products.
The judgment of dismissal is REVERSED, and this matter is REMANDED for further proceedings.
Notes
. Apparently the manufacturer, Royal King, claims proprietary rights to the molds from which the allegedly infringing bottle cap is produced.
. Federal courts may also always assume jurisdiction over a defendant in any action in which there is personal, in-state service of process. Burnham v. Superior Court,
. Hanson v. Denckla,
. Ruston Gas Turbines v. Donaldson Co.,
. See Oswalt v. Scripto, Inc.,
. The Asahi plurality listed the following as possible additional actions that would evidence an intent to serve the market of the forum state: "designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State.” Id.
. See also Burger King,
. See Bean Dredging,
. See Asahi,
.We have suggested, however, that the existence of a Free On Board (“F.O.B.”) term in a contract is one factor to consider in determining whether the defendant has "minimum contacts” with the forum state. See Singletary v. B.R.X., Inc.,
. For example, in Charia,
In those cases, the court found that the F.O.B. condition in the contract reinforced the holding that jurisdiction in the forum state was unforeseeable. Here, however, jurisdiction is foreseeable because of the regularity and quantity of shipments and the presence of a destination address on defendant’s invoices. Where jurisdiction is otherwise foreseeable, a F.O.B. term cannot deprive the court of jurisdiction over the defendant.
. Nuovo Pignone,
. We disagree with Insta-Mix that this conclusion means that it must choose between doing business with Wal-Mart or being subject to suit in all fifty states. It is possible that Insta-Mix will avoid suit in a jurisdiction that requires some additional act beyond "mere foreseeability” for personal jurisdiction to attach. See, e.g., Boit v. Gar-Tec Prods., Inc.,
Insta-Mix could also attach conditions to its vendor agreement that forbid Wal-Mart from shipping to those states that operate under a "mere foreseeability” regime, or to all distribution centers outside the Great Plains, or to any forum in which mounting a defense would be inconvenient. The fact that it has not done so supports our conclusion that Ins-ta-Mix intends to avail itself of as wide a market for its goods as possible. See Bean Dredging,
.See Shaffer v. Heitner,
. See also Gulf Consol. Servs., Inc. v. Corinth Pipeworks, S.A.,
. This reasoning applies with equal force to Luv n’ care's claims of trademark dilution and unfair competition under the Lanham Act, which in fact instructs the court, when deciding whether to issue an injunction to protect the trademark owner, to consider, inter alia, "the degree of recognition of the mark in the trading areas and channels of trade used by the mark’s owner and the person against whom the injunction is sought.” 15 U.S.C. § 1125(c)(1)(F). We reserve judgment on whether jurisdiction would lie for other causes of action outside the arena of products liability.
. See Bean Dredging,
. We also note that although Wal-Mart may be a more natural defendant in this action, the vendor agreement between Wal-Mart and Insta-Mix states that Insta-Mix shall defend and indemnify Wal-Mart against, inter alia, any actual or alleged copyright infringement.
. Because the district court did not rule on Insta-Mix’s alternative argument on improper venue, we do not reach that issue, and the parties are free to raise it on remand.
Concurrence Opinion
specially concurring:
I concur in the majority opinion because I recognize that Fifth Circuit precedent binds us to follow the “stream of commerce” approach in personal jurisdiction cases;
In my opinion, Justice O’Connor’s stream-of-commerce-plus theory is the more constitutionally defensible of the two theories of minimum contacts to emerge from Asahi. The principle of “minimum contacts” is a court-created principle that effectively limits a state’s exercise of jurisdiction over nonresident defendants. Jurists have long recognized “that the laws
This ease is the proverbial straw that breaks the camel’s back because it stretches the stream of commerce theory beyond its past limits and thus deepens the divide between circuits that require “additional conduct” and those that do not. Subjecting Insta-Mix to suit in Louisiana creates a “Wal-Mart exception,” rendering any small company that sells a product to Wal-Mart subject to suit in any state in the nation in which Wal-Mart resells the company’s products. Insta-Mix did no business in Louisiana; it had no agent for service of process in Louisiana; it negotiated a contract with Wal-Mart in Arkansas and it sold and delivered its products to Wal-Mart for its plant in Colorado; and Wal-Mart picked up Insta-Mix’s products in Colorado on a Wal-Mart truck (or a truck contracted for by Wal-Mart). None of the plus factors defined by Justice O’Connor in Asahi are satisfied on the record here: Insta-Mix’s product was not designed or designated for the Louisiana market; Insta-Mix did not advertise in Louisiana; Insta-Mix established no channels for providing regular advice to customers in Louisiana; and Insta-Mix did not market its product through a distributor who agreed to serve as a sales agent in Louisiana. Asahi,
. See Ruston Gas Turbines, Inc. v. Donaldson Co.,
