Superior Supply v. Assoc. Pipe & SupplySuperior Supply v. Assoc. Pipe & Supply
The principal issue in this case is whether the Louisiana court‘s exercise of personal jurisdiction over the nonresident defendant under
In June, 1985, plaintiff, a Texas corporation with its principal place of business in Shreveport, Louisiana, contracted to purchase steel casing for oil wells from defendant, a Colorado corporation which was not licensed to do business in Louisiana and had no office in this state.1 Shortly after contracting to purchase the casing, plaintiff resold it to a Texas company. The casing was shipped from defendant‘s Texas warehouse directly to plaintiff‘s vendee‘s well site in Texas.
Approximately one month after the sale, plaintiff was notified that the casing was
The matter was submitted on affidavits and briefs. Defendant admitted that it was doing business in Louisiana and had made “previous transactions of business with buyers in this state“, but pointed out that this particular sale was negotiated by means of a telephone conversation between its representative, Rob Dynes, in Colorado and plaintiff‘s representative in Shreveport.2 Defendant further asserted that the intent of the contract was to supply the pipe to plaintiff in Texas and that the pipe never entered Louisiana.
Plaintiff‘s employee who ordered the particular pipe by telephone stated in his affidavit that Rob Dynes had visited him in Shreveport on defendant‘s behalf and solicited business from plaintiff in April, September and one other date in 1985 (the year of the sale) and on other occasions.
The trial judge ruled that the Louisiana court could not exercise personal jurisdiction over defendant, concluding that there were not “sufficient minimal contacts arising out of defendant‘s activities within this state for the exercise of personal jurisdiction over it“. On appeal, the intermediate court affirmed on the basis of statutory interpretation without reaching the constitutional due process issue. 499 So.2d 558. The court of appeal held that
The determination of the validity of a state court‘s assertion of personal jurisdiction over a nonresident under a long-arm statute generally involves a two-step analysis. The state statute must provide authority for the court to exercise personal jurisdiction over the nonresident in the particular litigation, and there must be sufficient contacts between the defendant, the litigation and the forum state so as to comport with constitutional due process requirements.4 Petroleum Helicopters, Inc. v. Avco Corp., 513 So.2d 1188 (La.1987).
Before 1987,
“In addition to the provisions of Subsection A, a court of this state may exercise personal jurisdiction over a nonresident on any basis consistent with the constitution of this state and of the Constitution of the United States.”5
Inasmuch as the amended
In International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the Supreme Court of the United States held that personal jurisdiction may be asserted over a nonresident who has “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Id. at 316, 66 S.Ct. at 158. The decision approved the exercise of jurisdiction by a Washington court in an action by the state to assess and collect unemployment compensation fund contributions from a Missouri corporation employing several salesmen who resided in the state, but whose only corporate activity was to solicit orders in the state. The Court noted that the determination of due process must depend “upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure“, but stated that due process does not permit personal jurisdiction over a defendant “with which the state has no contacts, ties, or relations“.7 Id. at 319, 66 S.Ct. at 160.
The Court‘s analysis of corporate amenability to personal jurisdiction in terms of minimum contacts and relations with the forum state has been the basis for deciding a multitude of jurisdictional challenges in state and federal courts. Because many of these decisions have used language from International Shoe and subsequent decisions of the Court without analyzing the holdings, it is appropriate to review the
In McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), the Court permitted a California court to assert personal jurisdiction in a suit by a California beneficiary of a life insurance policy insuring a California resident, although the insurer was a Texas corporation whose only contact with the forum state was to offer by mail to reinsure the California resident (after the Texas insurer took over the obligations of another company) and to accept policy premiums mailed from California. The Court held that due process was satisfied since the suit was based on a contract which had substantial connection with the forum state, but also pointed out that California had a manifest interest in providing effective means of redress for its citizens when their insurers fail to pay claims. The Court also noted that since modern transportation and communications have made it much less burdensome to defend a suit in a state where the nonresident engages in economic activity, it usually is not unfair to subject the nonresident to the burden of litigating disputes relating to such activities.
In Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), the Court refused to allow a Florida court, in a dispute involving a power of appointment over the assets of a trust established in Delaware, to exercise personal jurisdiction over the trustee, a Delaware bank whose only connection with the forum state was its relationship with the deceased settlor who had moved to Florida after establishing the trust. The Court reasoned that a nonresident must purposefully avail itself of the privilege of conducting activities within the forum state in order to be subject to personal jurisdiction.
It was almost twenty years until the next major decision in Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), which was a derivitive action filed in Delaware by a nonresident owner of one share of stock in a Delaware corporation whose principal place of business was in Arizona. The defendants were past and present corporate officers and directors who were all nonresidents. The quasi in rem proceeding was based on the attachment of the defendants’ stock in the Delaware corporation. The Court held that the standards of fairness and substantial justice govern actions in rem as well as in personam. Noting that the “relationship among the defendant, the forum, and the litigation” is the “central concern of the inquiry into personal jurisdiction“, the Court concluded that the mere presence of the defendants’ property in the forum state does not alone support the exercise of jurisdiction. Id. at 204, 97 S.Ct. at 2580.
Kulko v. Superior Court, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978), involved a suit filed in California under the long-arm statute by a California resident against her former husband, a New York resident, to increase support payments for two children who were born while the parents were living together in New York.8 When the parties separated, the mother moved to California. She returned to New York to execute a separation agreement and then had the agreement incorporated into a Haitian divorce decree before returning to California. Both children eventually moved to California to live with their mother. The Court held that the assertion of personal jurisdiction as to the support claim was unreasonable because the California contacts did not result from the husband‘s purposeful acts, but rather from the acts of the wife and the children. The Court further noted that the state‘s interest in the welfare of the children was adequately protected by the availability of the Uniform Reciprocal Enforcement of Support Act.
In World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), the Court held that an Oklahoma court could not exercise personal jurisdiction in a products liability action against a regional automobile distributor or a local retail dealer, two New York corporations
The case of Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980), was filed in Minnesota by a Minnesota resident against an Indiana resident to recover damages arising from an automobile accident in Indiana.10 Because the defendant had no contacts with Minnesota which would support personal jurisdiction, the plaintiff (who had been a resident of Indiana at the time of the accident) attempted to obtain quasi in rem jurisdiction by seizing the obligation owed to the defendant by the defendant‘s liability insurer who was doing business in both Minnesota and Indiana.11 The Court held that the defendant‘s contacts with the forum state were insufficient and that the insurer‘s contacts could not be ascribed to the insured.
In Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982), a Delaware corporation that operated mines in Guinea sued its insurer (actually a group of foreign insurers) in Pennsylvania on a business interruption policy. When the insurers objected to the jurisdiction, but persistently failed to comply with orders compelling discovery on the issue of jurisdiction, the state court imposed a discovery sanction which in effect precluded the insurers from contesting jurisdiction because of their constructive waiver. The Court held that the insurers, by submitting the question of jurisdiction to the Pennsylvania court, agreed to abide by its procedures and that the use of discovery sanctions to estop the contesting of jurisdiction was a reasonable procedure which under the circumstances did not violate due process.
Keeton v. Hustler Magazine, 465 U.S. 770, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984) and Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), were defamation cases. In Keeton, a New York resident filed suit in New Hampshire against an Ohio corporation with a principal business place in California.12 Although the plaintiff had only limited contacts with the forum state, the Court held that the defendant‘s regular circulation of magazines in the forum state was a contact purposefully established by the defendant which was sufficient to support jurisdiction in an action based on the contents of the magazine. In Calder, a California resident filed suit in a California court against Florida residents who were the writer of a magazine article and the editor of the magazine which had its largest circulation in the forum state. Focusing on the relationship among the defendant, the litigation, and the forum, the Court held that the defendants intentional conduct in Florida was expressly aimed at the forum state and would be expected to have a potentially devastating impact upon the plaintiff there,
so that the defendants, unlike the retailer in World-Wide Volkswagen, should have “reasonably anticipated being haled into court there“.
Helicopteros Nationales de Colombia v. Hall, 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed. 2d 404 (1984), was a wrongful death action arising from a helicopter crash in Peru. Suit was filed in a Texas court against a Colombian corporation which had contracted to provide helicopter service in Peru to a Peruvian corsortium whose alter-ego was a joint venture with headquarters in Texas. Neither the plaintiffs nor their decedents, who were employees of the Peruvian consortium, resided in the forum state. The defendant‘s chief executive officer had flown to Texas to negotiate the helicopter contract with the joint venture. The defendant‘s only other contacts with Texas were the purchase of most of its helicopter fleet from a Texas manufacturer, the sending of the pilot and other employees involved in helicopter operations to be trained in Texas, and the receipt of payments for its services by checks drawn on a Texas bank. The Court held that the defendant‘s contacts with Texas were insufficient to allow a Texas court to assert jurisdiction over a nonresident on a cause of action based on tortious conduct which did not arise out of or relate to any activities by the Colombian corporation within the state. The Court noted that defendant‘s officer‘s one trip to Texas to negotiate the contract was not a contact of a continuous and systematic nature which would support an assertion of general jurisdiction, and the other contacts pertaining merely to purchases in Texas were not sufficient unless the cause of action was related to those purchases.
In Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), a Florida franchisor filed a breach of contract suit in Florida against a Michigan resident who had contracted by mail and wire to operate a franchise in Michigan. The Court permitted the exercise of jurisdiction on the basis that the defendant, although never physically entering the forum state, had created a substantial long-term economic relationship with a Florida firm that contemplated ongoing activity by the franchisor in the forum state. The Court suggested a method of determining jurisdiction, once it has been decided that the defendant purposefully established minimum contacts with the forum state, by considering these contacts in light of other factors to determine whether the assertion of personal jurisdiction comports with fair play and substantial justice.13 The Court concluded that when a nonresident has purposefully directed his activities at forum residents, he must present a compelling case that the presence of other conditions renders jurisdiction unreasonable.
Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 105 S.Ct. 2965, 86 L.Ed.2d 628 (1985), was a class action filed in Kansas to require a Delaware corporation, whose principal place of business was in Oklahoma, to pay interest to royality owners on delayed royalty payments. Ninety-seven per cent of the members of the class of plaintiffs lacked any contact with the forum state. The Court held that constitutional protection from state court jurisdiction is afforded in a higher degree to nonresident defendants in nonclass suits than to absent class plaintiffs, noting that the absent plaintiffs’ protection of notice, adequate representation and opportunity to opt out of the class satisfied due process.
Asahi Metal Industry Co. v. Superior Court, — U.S. —, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) was a products liability action in California, arising out of a motorcycle accident in California, against (among others) the Taiwanese manufacturer of the motorcycle tube and the Japanese manufacturer of the tube‘s valve assembly. After the plaintiff settled out of the case, the only remaining issue was whether the Japanese corporation should indemnify the
The theme that emerges from this series of decisions, rendered over a period of more than forty years and authored by a number of different justices, is that when a nonresident who has purposefully established contacts and relationships with the forum state contests the assertion of personal jurisdiction, the court must analyze the quality and nature of the contacts, the relationship among the defendant, the forum and the litigation, and the evidence presented by the nonresident of facts militating against the exercise of jurisdiction, and must then determine whether the exercise of jurisdiction is reasonable.14 Of course, particular relevant factors may be more or less important depending on the type of litigation and the nature of the defendant‘s business operation, as in World-Wide Volkswagen v. Woodson, supra, when jurisdiction over the products liability action was resisted by the local retailer rather than the manufacturer.
Of the cases reviewed, only two (McGee and Burger King) were contracts cases, as is the instant litigation, and the exercise of jurisdiction was approved in both. Of the cases in which the exercise of jurisdiction was not approved, two (Shaffer and Rush) were quasi in rem actions, one involving the attachment of stock in a shareholder‘s derivative suit and the other involving the seizure of a liability insurer‘s obligation to its insured in a personal injury suit. In neither case was there any substantial relationship among the defendant, the litigation and the forum.15 Kulko involved a child support claim in which there was no purposeful availment and another adequate remedy was available. Hanson, which adopted the purposeful availment criteria, involved trust litigation with virtually no contacts between the defendant trustee and the forum. World-Wide Volkswagen and Asahi Metal were products liability cases, but the former involved a local retailer and a regional distributor who simply sold the subject automobile far from the forum state, while the latter involved an indemnity claim between two Asian manufacturers. In Helicopteros the Colombian defendant had some contractual contacts with the decedents’ employer‘s alter-ego in the forum state, but the Court found an insufficient relationship between those contacts and the wrongful death litigation.16
The exercise of jurisdiction was approved in Keeton and Calder, both defamation cases in which the defendant purposefully established contacts with the forum state or engaged in conduct intentionally directed at the forum state.
Here, the nonresident was in the business of selling pipe and related supplies far beyond the borders of Colorado. By sending its employees to solicit sales in Louisiana and by selling pipe to Louisiana residents, defendant purposefully directed its business activities toward the forum state. The particular sale which is the subject of this litigation was negotiated in a telephone conversation between defendant‘s representative, who had entered Louisiana to solicit business from plaintiff, and plaintiff‘s representative, who had been one of the parties specifically contacted by defendant‘s employee‘s solicitation efforts in this state. Thus, the particular sale (two months after the last visit by defendant‘s representative) was clearly related to and more probably than not arose from defendant‘s business activities purposefully directed toward Louisiana. While these contacts may have been too random or attenuated to provide general jurisdiction, the contacts were clearly related to the litigation and were not fortuitous or the result of unilateral activity of a third person. Moreover, the fact that defendant was a supplier and not a manufacturer is not as significant in this dispute over contract terms as in products liability litigation. Finally, defendant‘s alleged failure to supply material in accordance with the contract caused foreseeable injury to a Louisiana resident, and this state has a manifest interest in providing its residents with a convenient forum for redressing contractual breaches by nonresidents who solicit business in this state.
The only factors raised by defendant which militate against jurisdiction are that the pipe was never shipped to or through Louisiana and that the intention of the contract at all times was to ship the pipe to Texas. These factors do not establish a compelling case that the exercise of jurisdiction in Louisiana is unreasonable, especially since there is no apparently greater burden on the Colorado defendant to defend a suit in Louisiana rather than Texas and since the Colorado defendant engaged in economic activities in both states relating to this litigation.
For these reasons, the judgments of the lower courts are reversed, the exception of lack of personal jurisdiction is overruled, and the case is remanded for further proceedings.
Notes
“The cause of action rises (sic) from the placement of an order for steel casing from plaintiff to defendant in Colorado. There is no evidence of a connection between Associated‘s employee‘s visits and the telephone call from which the cause of action arose. The cause of action appears to lie in Texas. The steel casing was delivered and allegedly found to be defective there. Witnesses undoubtedly will be in or near Zapata County, Texas.”
Id. at 561.