Unpublished Disposition, 844 F.2d 792 (9th Cir. 1988)

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US Court of Appeals for the Ninth Circuit - 844 F.2d 792 (9th Cir. 1988)

No. 87-5950.

United States Court of Appeals, Ninth Circuit.

Appeal from the United States District Court for the Central District of California; Honorable John G. Davies, Presiding.

Before BRUNETTI and DAVID R. THOMPSON, Circuit Judges, and C.A. MUECKE,**  Senior District Judge.

MEMORANDUM* 

Plaintiff Martin Kellner, successor in interest to Electric Motor Engineering (EME), appeals the district court's dismissal of his complaint for lack of personal jurisdiction over the defendants. A district court's determination regarding whether personal jurisdiction can be exercised presents a question of law, reviewable de novo when the underlying facts are undisputed. FDIC v. British-American Insurance Co., Ltd., 828 F.2d 1439, 1441 (9th Cir. 1987). Since the district judge made no findings of fact after viewing the parties' conflicting affidavits, Kellner need only establish a prima facie case to support a finding of personal jurisdiction. Pacific Atlantic Trading Co. v. M/V Main Express, 758 F.2d 1325, 1327 (9th Cir. 1985). We conclude that Kellner has failed to carry this burden and, accordingly, affirm the district court's dismissal.

This action arose from a business relationship between EME, a California corporation, Technical Associates (Technical),1  a New York corporation, and Gallmeyer, a New York resident. EME acted as the sales representative for non-party AEG-Telefunken (AEG), a German corporation, throughout the United States. Technical acted as a manufacturer's representative for many companies, concentrating its sales in the northeastern states and Toronto since 1975. Gallmeyer was an independent sales representative for Technical in western New York, selling the products of manufacturers represented by Technical to the Xerox Corporation (Xerox), on behalf of Technical. ESG Associates (ESG) is a corporation, formed by Gallmeyer as his own representative operation, which did not exist during the events at issue here.

In 1983, Technical and Gallmeyer became aware that Xerox was interested in AEG's products. Representatives of both EME and Technical met in Germany with AEG representatives to discuss the possibility of Technical acting under EME and selling AEG products in New York. Thereafter, in New York, EME and Technical negotiated and reached an agreement whereby Technical would act as the exclusive sales representative of AEG products in New York. This sales agreement did not involve Gallmeyer. Technical and Gallmeyer agreed separately that Gallmeyer would help Technical sell AEG products, on behalf of Technical, in New York.

Thereafter, Kellner contends that AEG told EME that it wanted to continue its relationship with EME and negotiate a new contract. However, the defendants contend that AEG told Gallmeyer that it wanted to terminate EME as its U.S. representative. Subsequently, Gallmeyer wrote a letter to AEG and proposed that he become the New York representative of AEG products. Kellner contends that Gallmeyer disparaged EME in this letter. Six months later, AEG terminated EME as its U.S. representative. Thereafter, EME dissolved and its assets and claims were transferred to Kellner.

Kellner claims that Gallmeyer's letter to AEG caused AEG to terminate its relationship with EME, and that Gallmeyer intended the letter to cause this effect. In its complaint, EME claims intentional interference with contractual relationship, intentional interference with prospective economic advantage, and trade libel against both Gallmeyer and ESG, and tortious breach of fiduciary duty, and constructive fraud against Gallmeyer alone.

To establish jurisdiction over these nonresident defendants, Kellner must show that both California's jurisdictional statute, Cal.Civ.Proc.Code Sec. 410.10 (West 1973), and federal constitutional principles of due process permit California's exercise of personal jurisdiction. Because California's jurisdiction has been interpreted to be coextensive with that authorized by the federal constitution, "jurisdictional inquiries under the state statute and due process principles can be conducted as a single analysis." Pacific Atlantic Trading Co., 758 F.2d at 1327; see also Forsythe v. Overmyer, 576 F.2d 779, 782 (9th Cir.), cert. denied, 439 U.S. 864 (1978).

"Due process requires that nonresident defendants have certain minimum contacts with the forum so that maintenance of a suit does not offend traditional notions of fair play and substantial justice." FDIC, 828 F.2d at 1441-42, citing International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945). Courts may exercise one of two types of jurisdiction. If a nonresident defendant has "substantial" or "continuous and systematic" contacts with the forum, a court can exercise general jurisdiction over the nonresident for any cause of action, even if it is unrelated to those contacts. Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1287 (9th Cir. 1977). However, when a defendant's contacts with the forum are not so substantial or continuous so as to subject him to general jurisdiction, a court can exercise limited, or specific, jurisdiction, but only over those claims which arise out of the defendants' forum-related activities. Haisten v. Grass Valley Medical Reimbursement, 784 F.2d 1392, 1397 (9th Cir. 1986).

The minimal contact the defendants have had with California precludes the exercise of general jurisdiction. This circuit uses a three-pronged test for determining whether limited jurisdiction can be exercised: "(1) the nonresident defendant must do some act or consummate some transaction with the forum or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or results from the defendant's forum related activities; (3) exercise of jurisdiction must be reasonable." Pacific Atlantic Trading Co., 758 F.2d at 1327, citing Data Disc, Inc., 557 F.2d at 1287.

Recently, this court has modified this three-pronged test with regard to the requirement of "purposeful availment," and "allowed the exercise of jurisdiction over a defendant whose only 'contact' with the forum state is the 'purposeful direction' of a foreign act having effect in the forum state." Haisten, 784 F.2d at 1397, citing Calder v. Jones, 465 U.S. 783, 789, 104 S. Ct. 1482, 1487, 79 L. Ed. 2d 804 (1984) (emphasis in original). However, this court has also recently held that if a court determines that the exercise of personal jurisdiction over a defendant is unreasonable, " [the court] need not determine whether the first two prongs of the test are satisfied." FDIC, 828 F.2d at 1442. Evaluating the reasonableness of exercising jurisdiction over Gallmeyer and ESG, using this circuit's seven relevant factors, id., we conclude that the defendants' contacts with the forum which arise out of their forum related activities are insufficient to permit the district court's exercise of personal jurisdiction over them.

1. The extent of purposeful interjection into the forum state

Gallmeyer can be said to have purposefully interjected himself into California only to the extent his business agreement with Technical, which provided that Gallmeyer would sell AEG products on behalf of Technical in New York state, and his letter to AEG proposing that he represent AEG directly in New York state, were both activities he purposefully directed at EME. However, these activities "appear to be the 'random', 'fortuitous', or 'attenuated' type of contact insufficient to support jurisdiction without violating the principles of fair play and substantial justice." FDIC, 828 F.2d at 1444, citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 486, 105 S. Ct. 2174, 2189, 85 L. Ed. 2d 528 (1985). "The smaller the element of purposeful interjection, the less is jurisdiction to be anticipated and the less reasonable is its exercise." Insurance Co. of North America v. Marina Salina Cruz, 649 F.2d 1266, 1271 (9th Cir. 1981). Therefore, this factor weighs against exercising jurisdiction.

2. The burden on the defendant of defending in the forum

The law of personal jurisdiction is "asymmetrical," with "the primary concern" being the burden on the defendant. FDIC, 828 F.2d at 1444. Gallmeyer is a New York resident, who conducts business solely in New York. The same is true for ESG, which Gallmeyer incorporated in New York after the events in question transpired. These circumstances, coupled with the fact that "the defendant has done little to reach out to the forum state," id., place an unreasonable burden on the defendant of defending in California. Thus, this factor also weighs against California exercising personal jurisdiction.

3. The extent of conflict with the sovereignty of defendant's state

Although the sovereignty barrier is usually higher in cases where the nonresident defendant is from a foreign nation, rather than from another state, New York arguably has the same, if not a greater interest in adjudicating this dispute. All of the events which gave rise to the dispute took place in New York. While this factor does not weigh as strongly as the others against exercising jurisdiction, we recognize New York's equal, if not greater interest, in resolving this controversy.

4. The forum state's interest in adjudicating the dispute

California's only interest in adjudicating this dispute is based on the defendant's alleged interference with EME, a California corporation, which is claimed to have caused EME to dissolve. If California law governed the dispute, California's interest in adjudication would be substantial. Id., citing Jacobs/Kahan and Co. v. Marsh, 740 F.2d 587, 592 (7th Cir. 1984). Although the sales agreement between Technical and EME specified California law as controlling, neither Gallmeyer or ESG were parties to that agreement. Consequently, California law will not necessarily control.

Additionally, although California has a strong interest in protecting its residents from injury and providing a forum to remedy harm, California courts "have expressed concern about the adverse effects the assumption of jurisdiction might have on commerce when the forum activities of the nonresident are not substantial." Pacific Atlantic Trading Co., 758 F.2d at 1330 (citation omitted). Given the insubstantial degree of forum-related activities conducted by the defendants, this factor also weighs against exercising jurisdiction.

5. The most efficient judicial resolution of the controversy

"The site where the injury occurred and where the evidence is located usually will be the most efficient forum." Id. at 1331. New York is clearly the most efficient forum for adjudicating this controversy because virtually all of the alleged events took place there. Additionally, most of the witnesses who could be expected to be called upon are located in New York. Also, the relationship between Technical and Gallmeyer, to sell AEG products, was entered into in New York. Finally, the letter written to AEG which allegedly defamed EME and caused AEG to terminate EME as its U.S. representative was written and sent from New York. This factor clearly weighs against California exercising jurisdiction.

6. The importance of the forum to plaintiff's interest in convenient and effective relief

Although California courts would certainly be more convenient to Kellner, a California resident, there is no indication that he would not be able to obtain effective relief in New York courts. In fact, because most of the witnesses and evidence likely to be used at trial are located in New York, Kellner might actually be able to resolve this dispute more efficiently if the case is also litigated in New York. This factor also weighs against California exercising jurisdiction.

Kellner bears the burden of establishing the unavailability of an alternative forum. Id. Kellner has failed to do so because there is no evidence that New York would not be an available alternative forum to decide this case. Therefore, this factor also weighs against exercising jurisdiction.

Considering that virtually all of the seven relevant factors indicate that exercising jurisdiction over Gallmeyer and ESG would be unreasonable, we affirm the district court's order dismissing the complaint for lack of personal jurisdiction over the defendants.

AFFIRMED.

 *

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Circuit Rule 36-3

 **

Honorable C.A. Muecke, Senior United States District Judge for the District of Arizona, sitting by designation

 1

Technical and Kellner have settled this action and, therefore, Technical did not respond to Kellner's appeal