Amusement Equipment, Inc., Plaintiff-appellant, v. Carl Heinz Mordelt, Heinz Mordelt Gmbh and Co. K.g. "heimo",defendants- Appellees, 779 F.2d 264 (5th Cir. 1985)

It all started out innocently enough with a contract to deliver a mechanical display elephant and four remote control cars. The German engineering of appellee Heimo Heinz Mordelt GMBH & Co. K.G. ("Heimo") would boost the efforts of Florida's Amusement Equipment, Inc. ("Amusement") to amuse and entertain for profit. But where Hannibal's elephants managed to cross the snowy Alps with relative ease, this elephant and its vehicular entourage had an unexpected layover in a London airport on the way to their new world. Thus, for want of a transatlantic flight, Amusement's waiting truck left Florida for New Orleans without its prized quarry, which Amusement had hoped to display there at the convention of the International Association of Amusement Parks and Attractions ("IAAPA"), an Illinois corporation.

Heimo, however, is a member in good standing of the IAAPA, and its general manager, appellee Karl Heinz Mordelt ("Mordelt") attended the convention. Perhaps with visions of Grace v. MacArthur¹  dancing through its corporate head, Amusement hunted Mordelt down, found him at the Marriot Hotel, served him and Heimo with process, and plunged the district court and us into the purgatory of transient jurisdiction. Finding that the rule of transient jurisdiction has suffered a fate akin to that of the once proud but now extinct dinosaurs, the district court, 595 F. Supp. 125, dismissed as to both defendants. Because we are unwilling, absent explicit instructions from above, to ferry this rule across the river Styx, we reverse and remand as to Mordelt. However, we find that jurisdiction over the corporation is not proper under Louisiana law, and we therefore affirm the district court's dismissal of Heimo.

THE FACTS

During September of 1983, the owner of Amusement, John Bond, visited Heimo's factory in West Germany and purchased some remote controlled boats for exhibition at an amusement industry trade show to be held in Jacksonville, Florida. Bond also discussed with representatives of Heimo the possibility of acquiring certain of Heimo's products for exhibition at the Sixty-Fifth Annual Convention and Trade Show of the IAAPA, to be held in New Orleans from November 17 through 20, 1983.

Bond was satisfied with the Heimo equipment exhibited at the Florida trade show. Consequently, on October 25, 1983, Bond contacted Mordelt by telephone to procure additional products for exhibition at the New Orleans trade show. Amusement Equipment agreed to purchase from Heimo one animated display elephant, four remote controlled automobiles, and certain accessory equipment for a price of DM 37,130, which, at the time, equalled U.S. $14,295.00. Heimo understood that Amusement intended to display the products at the New Orleans trade show scheduled to begin on November 17, 1983. Amusement needed the products delivered to Miami in sufficient time before the trade show so that they could be transported by its truck to New Orleans. Accordingly, Bond demanded that the products be delivered to Miami by November 12, 1983. Heimo required prepayment before it would ship the merchandise overseas.

On November 3, 1983, Amusement sent Heimo a telex stating that payment had been made by wire transfer on November 2, 1983, but that such payment was conditioned upon delivery of the products in Miami by November 12, 1983. If delivery of the goods could not be accomplished by that time, Amusement directed that its order be cancelled and that the funds be returned. On November 4, 1983, Heimo telexed Amusement that if the funds were received by its bank by November 7, 1983, Heimo could "guarantee [compliance with Amusement's] delivery requirements." On November 7, 1983, Heimo learned from its bank that Amusement's payment had been received. Heimo then arranged for the shipment of the merchandise by a German freight forwarder, Max Grunht, an independent contractor. Grunht received the merchandise at the Stuttgart Airport on November 9, 1983. Heimo directed that the goods be shipped to London on November 10, 1983, for immediate transfer to a Miami bound flight departing later the same day. Heimo telexed the shipping information to Amusement the same day. Also on November 9, 1983, Heimo sent Amusement an order confirmation, which provided that the merchandise was shipped C.I.F. "C.I.F." is the same as "F.O.B.," which means that title and the risk of loss passed to the purchaser upon delivery of the merchandise to the freight forwarder.

On November 12, 1983, Amusement telephoned Heimo that the merchandise had not yet arrived in Miami. Upon investigating the matter, Heimo learned that the airline departing London had refused to accept the shipment, since an earlier flight had been cancelled and freight from that flight had been given priority. The airline allowed the merchandise to remain in London without informing the freight forwarders, Heimo, or Amusement. Later on the 12th of November, Amusement telexed Heimo that the contract was cancelled and requested return of the funds. Heimo refused to return the funds.

Heimo is a member of the International Association of Amusement Parks and Attractions, the sponsor of the New Orleans trade show. Consequently, on November 20, 1983, Mordelt arrived in New Orleans to attend the show. Amusement alleges that Mordelt attended the show as a representative of Heimo. Thus, on November 21, 1983, Mordelt was personally served in New Orleans for himself and for his employer, Heimo.

Other than their presence at the trade show and their knowledge that Amusement needed the goods for display at the show, Mordelt and Heimo had no prior connection to New Orleans or Louisiana. They have no representatives of any sort in Louisiana, nor have they ever paid taxes to Louisiana. They have no assets in Louisiana, they have not advertised in any Louisiana news media, they are not listed in any Louisiana telephone directory, and they did not display any products at the trade show.

DISPOSITION BELOW

The district court assumed for the sake of argument that both Mordelt and Heimo had been properly served under both La.Code Civ.Proc. art. 6(1)²  and the Louisiana Long-Arm Statute, La.Rev.Stat.Ann. Sec. 13:3201.³  Finding that the rule of transient jurisdiction--under which a court gains personal jurisdiction over any defendant who has been served with process while present within the forum state--has, however, been fatally undermined by Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977), the court proceeded to dispose of the jurisdictional question with a minimum contacts analysis under the Due Process Clause. This analysis produced the conclusion that both Mordelt and Heimo lacked those minimum contacts, without which the court's assertion of jurisdiction would offend due process.⁴ 

DISCUSSION

" [T]he power of a federal court entertaining a suit based on diversity of citizenship to exercise jurisdiction over the persons of non-resident defendants turns on two independent considerations. The law of the state in which the court sits must confer jurisdiction over the persons of the defendant, and if it does, the exercise of jurisdiction must comport with basic due process requirements of the United States Constitution." Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700 F.2d 1026, 1028 (5th Cir. 1983) (quoting Product Promotions, Inc., v. Cousteau, 495 F.2d 483, 489 (5th Cir. 1974)), cert. denied, 466 U.S. 962, 104 S. Ct. 2180, 80 L. Ed. 2d 561 (1984).

Although we have found no recent pronouncements on the issue, we conclude that Louisiana law does confer jurisdiction over Mordelt. " [A] court may take jurisdiction over a nonresident when personal service is made on that person within the confines of the court's jurisdiction." Fidelity & Deposit Co. of Maryland v. Bussa, 207 La. 1042, 22 So. 2d 562, 563 (1945); see also Roper v. Brooks, 201 La. 135, 9 So. 2d 485, 490 (1942); Stewart v. Litchenberg, 148 La. 195, 86 So. 734, 735 (1920). These cases clearly support jurisdiction over the individual Mordelt.

As to the corporation Heimo, we have found no cases holding one way or the other that service of process upon an agent of a corporation temporarily present within the state is sufficient to establish jurisdiction over the corporation. Amusement has been unable to produce, and we have been unable to find, any authority for the proposition that Heimo is amenable to service of process under Louisiana law. An examination of the several Louisiana statutes pertaining to service of process on foreign corporations leads us to conclude that, with respect to non-Louisiana related causes of action, Louisiana does not assert jurisdiction over foreign corporations that have not appointed an agent for service of process in Louisiana courts and that do not and have not done business in Louisiana, regardless of whether an officer of the corporation happens to be temporarily present in the state. See LSA-R.S. 13:3201 (supra note 3); LSA-R.S. 13:3471(1) ("service of process ... on a cause of action resulting from such business activity in this state"). The cause of action against Heimo does not arise from Mordelt's presence in Louisiana, and Heimo is therefore not amenable to service of process under Louisiana law. We therefore do not reach the question whether the exercise of jurisdiction over Heimo would comport with the due process clause.

It is an historical truism that the transitory presence of an individual in a state to which he had no attachment or connection other than a momentary pause in his movement to other places sufficed to justify a state's exercise of personal jurisdiction. This notion developed in the days when travel was difficult and a plaintiff seeking to sue a defendant had to choose between traveling to the defendant's state or waiting to catch his prey in the unlikely chance that he wandered into the plaintiff's state.

We find it somewhat ironic that we are asked today to discard the rule in these modern times of elastic, expansive, and inexpensive travel. Nonetheless, while changes in the technological landscape have lessened the rule's harsh impact, the legal landscape has changed as well. Theories of jurisdiction grounded on notions of state sovereignty, which undergirded the rule, have been eroded by theories premised on defendants' due process rights.

The transient rule of personal jurisdiction has been much maligned by the commentators.⁵  After Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977), in which the Supreme Court extended the due process requirements of International Shoe Company v. State of Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), to the exercise of quasi in rem jurisdiction, commentators sounded the rule's death knell.⁶  Even those commentators who had supported the rule expressed considerable doubt as to its continuing viability.⁷ 

The source of the commentators' gloom rests principally on the following statement in Shaffer. "We therefore conclude that all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny." 433 U.S. at 212, 97 S. Ct. at 2584 (emphasis added). We concede that this sweeping assertion undermines the correspondingly categorical claim that " [i]t has long been black letter law that personal service within its geographical area establishes a court's personal jurisdiction over the defendant." Donald Manter Company, Inc. v. Davis, 543 F.2d 419, 420 (1st Cir. 1976). However, while Shaffer may have rendered the black letter gray, we do not think the letter of the law has become so pale that it can be read only with conjurer's glasses.⁸ 

All but one of the cases in which the Supreme Court has required an International Shoe minimum contacts analysis have involved in one way or another substituted service of process within the state, or service of process outside the state.⁹  In Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S. Ct. 413, 96 L. Ed. 485 (1952), on the other hand, the Court was faced with the question whether the courts of Ohio could exercise jurisdiction in a cause of action unrelated to a corporation's activities in Ohio when that corporation had been served in Ohio through its president and when its contacts with Ohio were continuous and systematic. In holding that the Due Process Clause did not compel a decision either way on the question of jurisdiction over the corporation, the Court also left undisturbed Ohio's practice of permitting "a complainant to maintain a proceeding in personam in its courts against a properly served nonresident natural person to enforce a cause of action which does not arise out of anything done in Ohio." Id. at 441, 72 S. Ct. at 416.

If we look to International Shoe, as Shaffer instructs us to do, we find that

due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice."

326 U.S. at 316, 66 S. Ct. at 158 (emphasis added) (citation omitted). Thus, International Shoe itself creates an exception to minimum contacts analysis where the defendant is present within the forum state.

However, in light of Insurance Corp. of Ireland v. Compagnie des Bauxites, 456 U.S. 694, 102 S. Ct. 2099, 72 L. Ed. 2d 492 (1982), we must still assess the propriety of an assertion of personal jurisdiction against the due process clause.¹⁰  While jurisdiction flows from a state's sovereignty, the requirement that a court have personal jurisdiction rests ultimately on the due process clause.¹¹ 

In Insurance Corp. of Ireland, the court upheld a finding of personal jurisdiction as a sanction under Fed. R. Civ. P. 37(b) (2) for defendants' refusal to comply with discovery orders relating to the jurisdictional question. In doing so, it did "not alter the requirement that there be 'minimum contacts' between the nonresident defendant and the forum state. Rather, [the holding dealt] with how the facts needed to show those 'minimum contacts' can be established...." Id. at 2104 n. 10.

However, the court upheld the continuing validity of consent--which by itself can overcome the absence of "minimum contacts"--as a basis of personal jurisdiction,¹²  and proceeded with an analysis in which the lower court's alternative finding of minimum contacts played only a minor role:

The personal jurisdiction requirement recognizes and protects an individual liberty interest. It represents a restriction on judicial power not as a matter of sovereignty, but as a matter of individual liberty. Thus, the test for personal jurisdiction requires that "the maintenance of the suit ... not offend 'traditional notions of fair play and substantial justice.' "

102 S. Ct. at 2104.

Recognizing this test as our guidepost, we conclude that there was nothing unfair or unjust in Amusement's play. Mordelt was properly served while present in New Orleans. When the defendant is present within the forum state, notice of the suit through proper service of process is all the process to which he is due. In this case, Mordelt's presence in New Orleans gave rise to a risk of his being haled into court, which, particularly in light of his knowledge that Amusement had intended to display Heimo's goods at the convention, was not so unpredictable as to be unfairly burdensome.¹³  By entering Louisiana, he subjected himself to sovereign powers from which, had he remained outside the state, he was otherwise protected. Insurance Corp. of Ireland, 102 S. Ct. 2104 n. 10; see note 11 supra.¹⁴ 

Given that a traditional notion of fair play and substantial justice has been that presence alone is sufficient to support personal jurisdiction, the facts of Mordelt's presence and proper service are decisive. Shaffer v. Heitner's admonition that " 'traditional notions of fair play and substantial justice' can be as readily offended by the perpetuation of ancient forms that are no longer justified as by the adoption of new procedures that are inconsistent with the basic values of our constitutional heritage," 97 S. Ct. at 2584, does not cause us to reach a contrary conclusion. Insofar as the due process clause "does not contemplate that a state may make binding a judgment ... against an individual or corporate defendant with which the state has no contacts, ties, or relations," id. at 2586 (quoting International Shoe Co. v. Washington, 326 U.S. at 319, 66 S. Ct. at 160), our holding is clearly not to the contrary.¹⁵ 

It could be argued that these facts are merely fortuitous, and that substantively, this case is no different from one in which Mordelt leaves Louisiana and subsequently receives service by mail. Analytically, however, there is a significant difference. While the due process clause necessarily restricts the state's sovereign power, no case has yet held that it eliminates that power altogether. That the requirement of personal jurisdiction rests in all cases on the due process clause does not weaken the proposition that the exercise of jurisdiction, as distinguished from its limitation, is a sovereign act. If there is anything that characterizes sovereignty, it is the state's dominion over its territory and those within it. Fairness does not operate in a vacuum. To abstract it from context and elevate it blindly over sovereign prerogatives is ultimately to free the individual from the obligations inherent in a statist system.

Wholly apart from the significance of the service of process, other factors strengthen our view that personal jurisdiction here is just and fair.¹⁶  First, defendant's presence within the forum state was purposefully related to his business existence. This is not a case in which Mordelt, in a purely personal capacity, visited New Orleans just to see relatives or to enjoy the cooking of Antoine's. Rather, the conclusion is undeniable that Mordelt was present in New Orleans on business for the purpose of representing Heimo and drumming up business for it at the convention of the IAAPA, of which Heimo was a member.

Second, we note that had this suit been brought in Florida, a strong case could be made that jurisdiction would have been proper under McGee v. International Insurance Co., supra, since the cause of action apparently arose out of business transacted with persons in Florida.¹⁷  The fact that the risk of being haled into a Louisiana court was significantly less than the risk of defending this suit in a Florida court takes on far less importance when the international nature of the transaction is considered. If Mordelt is to be subjected to the jurisdiction of a United States court, it matters little in weighing the burdens and inconveniences to Mordelt that the court is in Louisiana rather than Florida.¹⁸ 

Finally, Mordelt is not without protection against the inconveniences and burdens of litigating several blocks from the French Quarter. These protections include forum non conveniens,¹⁹  change of venue,²⁰  and choice of law rules.²¹  Although it is unavailing here, Mordelt may also move to quash service on the grounds that his presence in the forum state was procured by fraud, Wyman v. Newhouse, 93 F.2d 313 (2d Cir. 1937), cert. denied, 303 U.S. 664, 58 S. Ct. 831, 82 L. Ed. 1122 (1938), and he can, where permitted, protect himself in the future with forum selection clauses. M/S Bremen and Unterweser Reederei v. Zapata Off-Shore Co., 407 U.S. 1, 92 S. Ct. 1907, 32 L. Ed. 2d 513 (1972).²² 

CONCLUSION

We hold today that the rule of transient jurisdiction has life left in it yet. As lawyers and judges, we have looked at the problem from the practical work-a-day world in which we live, play, travel, and do business. We have asked ourselves whether Mordelt was in a relationship to the forum state that makes it ethical, not onerous, and fair, not oppressive, to subject him to the judicial arm of that state. Having answered in the affirmative, we reverse and remand.

AFFIRMED IN PART, REVERSED IN PART AND REMANDED.