Croix Retail, Inc., Respondent, vs. Logiciel, Inc., a California corporation, Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-220

 

 

Croix Retail, Inc.,

Respondent,

 

vs.

 

Logiciel, Inc., a California corporation,

Appellant.

 

 

 

Filed September 23, 2003

Affirmed

Robert H. Schumacher, Judge

 

Winona County District Court

File No. C7021483

 

 

Gregory A. Wohletz, Wohletz Law Office, 111 Riverfront Building, Suite 403, Winona, MN 55987 (for respondent)

 

Marc A. Al, Lindquist & Vennum P.L.L.P., 4200 IDS Center, 80 South Eighth Street, Minneapolis, MN 55402; and

 

Phillip P. Hansen, Hansen Law Office, Ltd., 476 West Broadway, Winona, MN 55987 (for appellant)

 

 

            Considered and decided by Toussaint, Chief Judge, Kalitowski, Judge, and Schumacher, Judge.

 

U N P U B L I S H E D   O P I N I O N

ROBERT H. SCHUMACHER, Judge

Appellant Logiciel, Inc., challenges the district court's denial of its motion to dismiss the suit filed against it by respondent Croix Retail, Inc., for lack of personal jurisdiction and under the doctrine of forum non conveniens.  We affirm.

FACTS

Croix is a Minnesota corporation that operates 15 retail clothing stores throughout the United States and has its principal place of business in Winona.  Logiciel is a California corporation that produces and sells "Retail-ease," a computer software program designed to allow retailers to collect and transmit sales and inventory data.  Logiciel has conducted business with retailers in 26 states, including Minnesota, and at one time (1997) maintained local offices throughout the country.  Logiciel has never sent representatives or direct mailings to Minnesota or otherwise specifically solicited business from Minnesota customers.  Logiciel maintains a website that describes its products, invites purchase inquiries via email or telephone, and allows visitors to run a product demonstration. 

            A Croix employee approached the Logiciel exhibition booth at a March 1999 international trade show in Las Vegas, Nevada, and discussed Retail-ease with a Logiciel representative.  Two Croix employees subsequently visited the Logiciel offices in California and Croix requested a proposal for Logiciel to supply Croix's San Francisco store with one licensed copy of the Retail-ease program and its accompanying hardware.  Croix later purchased additional software and hardware from Logiciel.  Logiciel trained Croix employees in Logiciel's California offices and provided technical support and training via telephone to Croix employees in Minnesota.  Croix's information technology manager ran the product demonstration available on Logiciel's website.  During the time Croix used Retail-ease, Logiciel sent software to Croix via post, sent software updates electronically to Croix, electronically accessed and repaired Croix's central computer, participated in frequent telephone conversations with Croix concerning Retail-ease, sent email and invoices to Croix, and received payments from Croix drawn on Croix's Minnesota bank account. 

In March 2002, Croix filed suit against Logiciel in Minnesota district court, alleging breach of contract, intentional and negligent misrepresentation, breach of warranty, and negligence, all arising from Croix's dissatisfaction with the products and services purchased from Logiciel.  Logiciel filed a motion to dismiss Croix's suit, arguing two points.  First, the district court lacked personal jurisdiction over Logiciel due to the latter's limited contacts with Minnesota.  Second, the doctrine of forum non conveniens required transferring the matter to a California court.  The district court denied the motion to dismiss on both grounds. 

D E C I S I O N

1.         Whether personal jurisdiction exists is a question of law, which this court reviews de novo.  Griffis v. Luban, 646 N.W.2d 527, 531 (Minn. 2002).  To defeat a motion to dismiss for lack of subject matter jurisdiction, the nonmoving party bears the burden of making a prima facie showing of jurisdiction.  Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290, 293, 240 N.W.2d 814, 816 (1976).  Because Logiciel made its motion to dismiss before trial, Croix's allegations and evidence supporting jurisdiction must be taken as true and the facts must be viewed in the light most favorable to Croix.  V.H. v. Estate of Birnbaum, 543 N.W.2d 649, 653 (Minn. 1996).

For a Minnesota court to exercise personal jurisdiction over a nonresident defendant, the defendant must come within the reach of the long-arm statute, Minn. Stat. § 543.19 (2002), and the exercise of jurisdiction under the long-arm statute must comport with the Due Process Clause of the Fourteenth Amendment.  Id.  Because the Minnesota long-arm statute provides jurisdiction as broad as due process will allow, we need only consider whether Minnesota's exercise of personal jurisdiction over Logiciel is consistent with due process.  See id.  In doing so, we may apply federal caselaw.  Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn. 1992). 

A state court's exercise of personal jurisdiction over a nonresident defendant will comport with constitutional due-process requirements only if the defendant has "minimum contacts" with the forum state so that "maintenance of the suit does not offend traditional notions of fair play and substantial justice."  Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945) (quotation omitted).

Where the resident plaintiff's claim allegedly arose out of the nonresident defendant's limited contacts with the forum state in this case a single transaction the defendant may be subject to "specific" personal jurisdiction.  See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 2181-82 (1985); Valspar, 495 N.W.2d at 411.  Specific jurisdiction may be found where the nonresident defendant has "purposefully directed his activities at residents of the forum and the litigation results from alleged injuries that arise out of or relate to those activities."  Griffis, 646 N.W.2d at 532 (quoting Burger King, 471 U.S. at 472, 105 S. Ct. at 2182).     Here, Croix contends Logiciel had sufficient contacts, out of which Croix's claims arose, to support the Minnesota court's exercise of personal jurisdiction.

            A determination of minimum contacts depends on the "relationship among the defendant, the forum, and the litigation."  Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16, 104 S. Ct. 1868, 1872 (1984) (citation and quotation omitted).  The defendant must have "purposefully avail[ed] itself of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws."  Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240 (1958).  "The defendant's conduct and connections with the forum state must be such that the defendant 'should reasonably anticipate being haled into court there.'"  Griffis, 646 N.W.2d at 532 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490 (1980)).  The defendant's actual presence in the forum state is not necessary.  Burger King, 471 U.S. at 476, 105 S. Ct. at 2184. 

Minnesota courts consider five factors to determine whether the exercise of personal jurisdiction over a defendant is proper:  "(1) The quantity of the contacts with the forum state, (2) The nature and quality of the contacts, (3) The source and connection of the cause of action with these contacts, (4) The interest of the state providing a forum, (5) The convenience of the parties."  Vikse v. Flaby, 316 N.W.2d 276, 282 (Minn. 1982) (adopting test set forth in Aftanase v. Econ. Baler Co., 343 F.2d 187 (8th Cir. 1965)).  A court looks at the totality of the circumstances to determine whether it may assert personal jurisdiction.  Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1388 (8th Cir. 1995).    "[I]n a close case, doubts should be resolved in favor of retention of jurisdiction."  Valspar, 495 N.W.2d at 412.

            Logiciel is a California corporation that has never specifically solicited customers in Minnesota, sent direct mailings to Minnesota, or sent its representatives to Minnesota for business.  At all times relevant to this matter, however, Logiciel maintained a website accessible from anywhere in the United States promoting its products and inviting business inquiries.  The website stated Logiciel had "local offices throughout the country" by 1997 and would "continue to expand in the U.S. and internationally."  Logiciel solicited business at trade shows such as the international trade show in Las Vegas where Croix first became aware of Retail-ease.

Aside from Minnesota, Logiciel has done business with customers in 25 states.  There is no evidence Logiciel intended to limit its market to any specific region of the country.  In the approximately two-year period after Croix contracted to purchase the software from Logiciel, Logiciel frequently communicated with Croix by telephone and e-mail, transmitted software to Croix electronically and by post, and provided remote diagnostic testing and technical support to Croix's computer system in Minnesota.  The quantity of contacts here supports the exercise of personal jurisdiction by Minnesota courts.

Because Croix argues jurisdiction is based upon minimal contacts, the nature and quality of those contacts are dispositive.  See Marquette Nat'l Bank v. Norris, 270 N.W.2d 290, 295 (Minn. 1978).  The critical question is "whether the nonresidents purposefully availed themselves of the benefits and protections of Minnesota law," or whether "the defendant was brought into contact incidentally through the unilateral activity of the plaintiff."  Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 907 (Minn. 1983) (citation and quotation omitted).  The contacts must be such that the nonresident defendant has "fair warning" of being sued in Minnesota.  Real Properties, Inc. v. Mission Ins. Co., 427 N.W.2d 665, 668 (Minn. 1988) (citing Burger King, 471 U.S. at 472, 105 S. Ct. at 2182).   

In evaluating the nature and quality of contacts with the forum state, we must determine which party was the aggressor in pursuing the transaction.  See TRWL Fin. Establishment v. Select Int'l, Inc., 527 N.W.2d 573, 577 (Minn. App. 1995) (observing Minnesota has exercised personal jurisdiction over nonresidents based on single transaction where nonresidents initiated contacts with Minnesota residents and took some action that induced residents to enter into transaction).

In cases involving disputed sales contracts negotiated and performed without the nonresident defendant physically entering the state, Minnesota courts have generally exercised personal jurisdiction over nonresident defendant sellers more readily than over nonresident defendant buyers.  Compare S.B. Schmidt Paper Co. v. A to Z Paper Co., 452 N.W.2d 485 (Minn. App. 1990) (declining jurisdiction over nonresident purchaser of paper from Minnesota paper seller where all contacts were by telephone and mail), with State by Humphrey v. Granite Gate Resorts, Inc., 568 N.W.2d 715 (Minn. App. 1997) (exercising jurisdiction where Nevada internet-gambling provider solicited business from Minnesota residents), aff'd mem., 576 N.W.2d 747 (Minn. 1998).

Logiciel argues Croix was the aggressor because Croix employees approached the Logiciel booth and inquired about Retail-ease, visited Logiciel's California offices, and requested a proposal to provide Retail-ease to Croix's San Francisco store.  We disagree. 

First, Logiciel's presence at the international trade show indicates a willingness to establish contacts with a national sales market.  See Rostad v. On-Deck, Inc.,  372 N.W.2d 717, 721 (Minn. 1985) (holding district court had jurisdiction over nonresident defendant whose "contracts and marketing efforts were calculated attempts to create a national market for his product, a market which specifically includes Minnesota.").

Second, "[m]ere inquiry by a prospective buyer or seller does not make the inquirer the aggressor in the transaction."  TRWL, 527 N.W.2d at 577.  After Croix inquired about Retail-ease, Logiciel made representations to Croix sufficient to convince Croix to purchase software; Logiciel does not argue it played no part in Croix's decision to enter into a contractual agreement.  Third, Logiciel's presence at the trade show and Logiciel's representations concerning Retail-ease ultimately induced Croix to pursue a contract. 

Logiciel argues advertising on a website accessible nationwide is insufficient to charge it with notice that suit might be brought in Minnesota.  It is true that generally, the placement of advertising in a nationally distributed forum does not establish personal jurisdiction.  See Now Foods Corp. v. Madison Equip. Co., 386 N.W.2d 363, 367 (Minn. App.) (refusing to extend jurisdiction where one advertisement in national trade magazine induced sale of defective product), review denied 395 N.W.2d 926 (Minn. 1986).  But solicitation-type contacts can be "purposeful" and "sufficient for the exercise of personal jurisdiction if extensive and directed at Minnesota customers or if combined with other qualitative contacts."  Id. (citations and quotations omitted). 

Here, Logiciel's other qualitative contacts, including its stated goal to attract a national clientele, indicate it purposefully directed its activities at a national market that included Minnesota.  This contact favors Minnesota's exercise of jurisdiction.  Cf. Johnson Bros. v. Arrowhead Co., 459 N.W.2d 160, 164 (Minn. App. 1990) (holding district court lacked personal jurisdiction in part because defendant's marketing and distribution efforts were restricted to western and southern states there was "no evidence that [the defendant] . . . sought to establish a national market by its advertising.").

Logiciel also argues the quality of the commercial activity conducted on its website is insufficient to support the conclusion it purposely availed itself of the benefits and protections of Minnesota law.  See Multi-Tech Sys., Inc. v. VocalTec Communications, Inc.,  122 F. Supp. 2d. 1046, 1050 (D. Minn. 2000) (adopting "sliding scale" test established in Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997), for determining whether a website exposes its operator to specific personal jurisdiction in a foreign state where the site is accessible).  We agree.

Under the Zippo test, "a defendant clearly does business over the Internet by entering into contracts with residents of other states," thereby supporting the exercise of personal jurisdiction.  Multi-Tech Sys., 122 F. Supp. 2d at 1050 (citation and quotation omitted).  A passive website that merely advertises products, without allowing visitors to make purchases on-line, generally does not support personal jurisdiction.  Id.  A website that permits some interaction must be "assessed to determine the level of interactivity and commercial nature of the exchange of information that occurs."  Id. (citations and quotations omitted).

            Logiciel's website allows visitors to enter personal information and run a demonstration of Logiciel's products, but does not allow visitors to make purchases on-line.  We conclude the website exceeds the passive end of the website spectrum, but is not sufficiently interactive to support personal jurisdiction. 

            Logiciel's Internet contacts with Croix also included regular emails, the repeated transmission of software updates, and remote diagnostic testing and servicing of Croix's computer.  "If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet computer network, personal jurisdiction over defendant is proper."  Id. at 1050 (citing Zippo Mfg., 952 F. Supp. at 1124); see also Granite Gate, 568 N.W.2d at 719 (stating "establishing channels for providing regular advice to customers in the forum state, indicates a defendant's intent to serve the market in that state" (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 112, 107 S. Ct. 1026, 1032 (1987))).  Logiciel's regular transmission to Minnesota of computer files and advice related to its contract with Croix supports the exercise of personal jurisdiction.

Once the parties here entered into a contract for the sale and installation of the Retail-ease software, Logiciel created a "continuing obligation between itself and residents of [Minnesota, thereby] . . . purposefully avail[ing] itself of the protections of the law."  Marshall v. Inn on Madeline Island, 610 N.W.2d, 670, 675-76 (citation omitted).  It appears here the nature and quality of Logiciel's contacts with Minnesota support personal jurisdiction.

Logiciel argues there is no nexus between the contacts and Croix's cause of action because the sale of Retail-ease and Logiciel's representations concerning Retail-ease occurred outside of Minnesota; Logiciel also contends any contacts made after the software sale are irrelevant to a determination of jurisdiction.  We disagree.

"When a claim arises out of a contract that has a 'substantial connection' with the forum state, specific jurisdiction exists."  Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 31 (Minn. 1995) (quoting McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 201 (1957)).  A substantial connection is created by the terms of the contract as well as the parties' "prior negotiations and contemplated future consequences . . . and the parties' actual course of dealing."  Burger King, 471 U.S. at 479, 105 S. Ct. at 2185-86.

We conclude the contract here had a substantial connection to Minnesota.  Although the contract was not executed in Minnesota, the contract's critical promised performance successful receipt of sales and inventory data from Croix's various stores was to take place at Croix's headquarters in Winona.  See Caesar's World, Inc. v. Spencer Foods, Inc., 498 F.2d 1176, 1181 (8th Cir. 1974) (holding contract has substantial connection to state where it is performed); Gardner Eng'g Corp. v. Page Eng'g Co., 484 F.2d 27 (8th Cir. 1973) (observing place of contracting is of secondary importance in determining jurisdiction and holding promise of performing contractual obligation within forum state provides substantial connection).

Logiciel's contacts with Minnesotasoliciting, negotiating, and performing a contract with Croixgave rise to Croix's cause of action.  This factor supports the exercise of personal jurisdiction.  See Burger King, 471 U.S. at 478-79, 105 S. Ct. at 2185-86 (holding contract at issue had substantial connection with forum state in that it created long-term relationship between nonresident defendant and plaintiff and defendant's breach caused foreseeable injuries to plaintiff in forum state).

The last two factors are less significant.  Dent-Air, 332 N.W.2d at 907.  Minnesota has a strong interest in providing a forum for its citizens to address tortious conduct, see V.H., 543 N.W.2d at 658, and to address fraudulent conduct.  Kopperud v. Agers, 312 N.W.2d 443, 445 (Minn. 1981).  Because Croix sued Logiciel for various torts, including fraud, Minnesota has a strong interest in providing a forum. 

As for convenience of the parties it is not unfair to expect a party to defend itself in a state where it engages in economic activity when the litigation relates to that activity.  McGee, 355 U.S. at 223, 78 S. Ct. at 201.  Logiciel represents itself as seeking a national clientele and doing business in dozens of states; requiring it to face suit in Minnesota is not unduly inconvenient.

Even where a district court finds a nonresident defendant has the requisite minimum contacts with the forum state, the court must consider whether the assertion of personal jurisdiction "would comport with fair play and substantial justice."  Burger King, 471 U.S. at 476, 105 S. Ct. at 2184 (quotation omitted).  The defendant has the burden to present "a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Id.  at 477, 105 S. Ct. at 2185.

Logiciel argues its financial status is such that forcing it to face suit in Minnesota would constitute an undue burden.  In support, it relies on financial disclosures whose accuracy is contested by Croix.  Resolving this factual dispute in Croix's favor, as we must, we conclude Logiciel has not shown Minnesota jurisdiction to be unreasonable here.

Application of the five-factor test leads us to the conclusion Logiciel's contacts with Minnesotaa contract that gave rise to Croix's suitsupport the exercise of specific personal jurisdiction over Logiciel by this state's courts.  Because we so conclude, we do not address Croix's argument Minnesota's exercise of personal jurisdiction over Logiciel is also consistent with due process under the "effects test" established by Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482 (1984).    

2.         Logiciel contends the district court abused its discretion by not declining jurisdiction under the doctrine of forum non conveniens.  We disagree.

Dismissal on the basis of the doctrine of forum non conveniens may be appropriate where the exercise of personal jurisdiction "imposes a hardship that does not rise to the level of a due process violation."  Rykoff-Sexton, Inc. v. Amer. Appraisal Associates, 469 N.W.2d 88, 91 (Minn. 1991).  "The remedy is an equitable one, however, and we review the trial court's determination only for an abuse of discretion." Id. (citation omitted).  There is a presumption that the plaintiff is permitted to choose the forum; however, the court may deny the plaintiff's choice when certain factors weigh heavily in favor of a different jurisdiction.  Hague v. Allstate Ins. Co., 289 N.W.2d 43, 46 (Minn. 1978).  These factors include (1) ease of access to proof; (2) availability of process for reluctant witnesses; (3) cost of obtaining witness attendance; (4) possibility to view premises; (5) enforceability of judgment; and (6) relative advantages and obstacles to a fair trial.  Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S. Ct. 839, 843 (1947). 

            Logiciel argues equity requires transferring the case to California because of its dire financial situation and because most of the witnesses are located in California.  The record indicates witnesses and evidence are located in both California and Minnesota, and transferring the case would only serve to inconvenience Croix instead of Logiciel.  But a "motion to transfer will not be granted if it merely shifts inconvenience from one party to the other."  Norval Indus., Inc. v. Superior Coms., Inc.  515 F. Supp. 895, 899 (D. Minn. 1981) (citation and quotation omitted).  Because the applicable factors do not weigh heavily in favor of transferring this matter to California, we conclude the district court did not abuse its discretion by denying Logiciel's motion to dismiss under forum non conveniens.

            Affirmed.