Maxxim Med Inc v. Michelson ( 2004 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-20295
MAXXIM MEDICAL, INC.,
Plaintiff-Appellee,
versus
MARX MICHELSON,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Texas
(H-99-0460)
June 4, 1999
Before WIENER, DeMOSS, and PARKER, Circuit Judges.
PER CURIAM:*
Plaintiff-Appellee Maxxim Medical, Inc. (“Maxxim”) sued its
former employee, Defendant-Appellant Mark Michelson, in federal
district court in California and in state court in Fort Bend
County, Texas, seeking an injunction to prohibit him from working
for a competitor. Maxxim grounded its complaint in a non-
competition confidentiality agreement contained in a stock option
contract. Michelson removed the Texas suit to the district court
for the Southern District of Texas which, after determining the
applicability of California law to the non-competition agreement,
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
found that it violated California law prohibiting such agreements.
Nevertheless, the court crafted an injunction prohibiting Michelson
“for one year from his resignation date from working for a direct
competitor of Maxxim in any of the product lines he was associated
with at Maxxim during the last two years” he worked there. The
district court based its decision on an Erie guess that, if faced
with the question, the courts of California would adopt the
“inevitable disclosure” theory of trade secrets law1 and that
Michelson’s employment by a competitor of Maxxim would inevitably
lead to disclosure of trade secrets. We granted Michelson’s motion
for an expedited appeal of the district court’s injunction.
I. Appellate Jurisdiction
As a general rule, we do not have jurisdiction to review
interlocutory orders. Under 28 U.S.C. § 1292(a)(1), however, the
grant of a temporary injunction is an appealable interlocutory
order. Moreover, under the collateral order doctrine, an
interlocutory order is immediately appealable if it “(1)
conclusively determine[s] the disputed question, (2) resolve[s] an
important issue completely separate from the merits of the action,
and (3) [is] effectively unreviewable on appeal from final
judgment.”2
The parties do not dispute our jurisdiction to review the
district court’s grant of the temporary injunction, but do dispute
1
See PepsiCo v. Redmond, 54 F.3d 1262 (7th Cir. 1995).
2
Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978).
2
whether we have pendent jurisdiction to review that court’s
interlocutory orders regarding, inter alia, personal jurisdiction.
Michelson cites Magnolia Marine Transportation Company v. LaPlace
Coin Corporation3 for the proposition that we do have such pendent
jurisdiction because § 1292(i) grants subject matter jurisdiction
over issues that “establish the basis” for the grant of a
preliminary injunction. He also contends that we have jurisdiction
over these orders by virtue of the collateral order doctrine.
Maxxim argues in response that Michelson’s reliance on
Magnolia Marine is misplaced, as the jurisdictional standard
articulated in that case has been replaced by the one set forth in
Swint v. Chambers County Commissioners.4 Following the court’s
decision in Swint, we noted, in Thornton v. General Motors Corp.,5
that “pendent appellate jurisdiction is only proper in rare and
unique circumstances where a final appealable order is
``inextricably intertwined’ with an unappealable order or where
review of the unappealable order is necessary to ensure meaningful
review of the appealable order.”6
Maxxim advances that the district court’s personal
jurisdiction and other interlocutory rulings are not inextricably
intertwined —— as, for example, would be an injunction against
3
964 F.2d 1571, 1580 (5th Cir. 1992).
4
514 U.S. 35 (1995).
5
136 F.3d 450 (5th Cir. 1998).
6
Id. at 453-54.
3
proceeding in a court under motion to transfer venue to that court7
—— and that review of those orders is not necessary to ensure
meaningful review of the injunction order. Maxxim also contends
that none of the other orders satisfies the requisites of the
collateral order doctrine.8
Although we recognize that, as a general rule, jurisdictional
determinations by the district court are not immediately appealable
as collateral orders or otherwise, there are exceptions. As noted
above, we recognized that proposition recently in Thornton. We
conclude that the instant case —— linking a clearly appealable
interlocutory order granting a preliminary injunction with the
question of the court’s ruling that it had jurisdiction in personam
over the person sought to be enjoined —— presents such an
exception. As issued, the injunction in this case has the very
real effect of prohibiting Michelson from pursuing his livelihood.
Even if the compensation that he does not receive during the
efficacy of the injunction (plus interest and damages as well)
could be reimbursed by Maxxim and thus not be deemed irreparable
injury, the same cannot be said of other effects of the injunction:
7
Md. v. Atlantic Aviation Corp., 361 F.2d 873 (3rd Cir.
1966).
8
See Van Cauwenberghe v. Bierd, 486 U.S. 517, 527 (1988) (“the
denial of a claim of lack of jurisdiction is not an immediately
appealable collateral order”); Rein v. Socialist Peoples’ Libyan
Arab Jamahariya, 162 F.3d 748, 756 (2d Cir. 1998) (“denials of
motions to dismiss for jurisdictional reasons cannot ordinarily be
the subject of interlocutory appeals”); Louisiana Ice Cream
Distribs. v. Carvel Corp., 821 F.2d 1031, 1033 (5th Cir. 1987)
(holding orders regarding venue and transfer are not immediately
appealable).
4
The company for whom Michelson went to work following resignation
from Maxxim will not necessarily hold open that or any position for
Michelson; and the injurious effects to Michelson and his family
from the abrupt interruption of his stream of earned income are
such that virtually no amount of money could repair them. We are
satisfied that, under the particular facts of this case, the issue
of personal jurisdiction is so “inextricably intertwined” with the
granting of the injunction, and that ordinary channels of appellate
review would be so ineffectual, that even under Swint and Thornton,
we have —— and must exercise —— appellate jurisdiction to review
the district court’s determination that it had personal
jurisdiction over Michelson.9
II. Personal Jurisdiction
A federal district court sitting in diversity may exercise
personal jurisdiction over a nonresident defendant if (1) the
long-arm statute of the forum state confers personal jurisdiction
over that defendant; and (2) exercise of such jurisdiction by the
forum state is consistent with due process under the United States
9
See Burlington Indus. v. Maples Indus., 97 F.3d 1100, 1101
(8th Cir. 1996) (holding in trade secret misappropriation case that
court had appellate pendent jurisdiction to review personal
jurisdiction determination underlying appealable preliminary
injunction order); see also NationsBank Corp. v. Herman, No. 98-
1127, 1999 WL 187239, at * 2-3 (4th Cir. Apr. 6, 1999) (holding
court had appellate pendent jurisdiction over denial of motion for
summary judgment based on plaintiff’s alleged failure to exhaust
administrative remedies because “if [plaintiff] must exhaust . . .,
the preliminary injunction was improper.”); Thornton, 136 F.3d at
453-454 (holding court had appellate pendent jurisdiction to review
attorney’s fees sanction because it was “inextricably intertwined”
with immediately appealable suspension sanction).
5
Constitution.10 In the present case, because Texas long-arm
statute10 extends to the limits of federal due process, these two
steps collapse into one.11
The Due Process Clause of the Fourteenth Amendment permits the
exercise of personal jurisdiction over a nonresident defendant when
(1) that defendant has purposefully availed himself of the benefits
and protections of the forum state by establishing "minimum
contacts" with the forum state; and (2) the exercise of
jurisdiction over that defendant does not offend “traditional
notions of fair play and substantial justice.”12 The defendant,
through his conduct and connection with the forum state, should
reasonably anticipate being haled into court in the forum state.13
As Maxxim alleges its suit arises from or relates to the
defendant’s contact with the forum state, we are concerned with
“specific jurisdiction.”14 Although a single act by the defendant
directed at the forum state can be enough to confer personal
10
See, e.g., Ham, 4 F.3d at 415; Irving v. Owens-Corning
Fiberglas Corp., 864 F.2d 383, 385 (5th Cir. 1989).
10
Tex. Civ. Prac. & Rem. Code §§ 17.041-045 (Vernon 1986).
11
Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990); Ham,
4 F.3d at 415 & n.7.
12
International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945).
13
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
297(1980).
14
See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466
U.S. 408, 414 n.8 (1984); Bearry v. Beech Aircraft Corp., 818 F.2d
370, 374 (5th Cir. 1987).
6
jurisdiction if that act gives rise to the claim being asserted,15
entering into a contract with an out-of-state party, standing
alone, is not sufficient to establish minimum contacts.16 Rather,
in a breach of contract case, to determine whether a party
purposefully availed himself of a forum, a court must evaluate
“prior negotiations and contemplated future consequences, along
with the terms of the contract and the parties’ actual course of
dealing....”17
In holding that it had personal jurisdiction over Michelson,
the district court relied on the facts that: Michelson (1) entered
into an employment agreement with a Texas-based company while
living in California, (2) signed stock option agreements with a
Texas employer while he was living in California, which agreement
specified application of Texas substantive law but not jurisdiction
or venue, (3) made sales trips to Texas at the behest of employer,
(4) supervised personnel whose territory included but a sliver of
far west Texas —— namely, El Paso, Texas, (5) annually attended
Maxxim’s mandatory national sales training meeting in Texas, (6)
made mandatory visits to Maxxim’s assembly plants in Texas, and (7)
made telephone calls to and from Maxxim’s Texas headquarters.
The district court correctly held that these contacts were not
sufficiently “continuous and systematic” to justify the exercise of
15
Ham, 4 F.3d at 415-16; Dalton v. R & W Marine, Inc., 897 F.2d
1359, 1361 (5th Cir. 1990).
16
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478-79 (1985).
17
Id. at 479.
7
general jurisdiction over Michelson,18 yet concluded —— curiously
—— that they were sufficient to confer specific jurisdiction over
him. As indicated above, to establish that the court has specific
jurisdiction over Michelson, Maxxim must show that Michelson
undertook some activity in, or purposefully directed some act at,
Texas, and that its claims arise out of or relate to those acts.19
Maxxim, however, has failed to demonstrate that any of Michelson’s
alleged contacts has even the slightest nexus with its
unenforceable non-competition claim or its misappropriation of
trade secrets claim. Accordingly, those contacts cannot serve as
the basis for an exercise of specific jurisdiction over Michelson.
As Maxxim can point to no other link between Michelson and Texas
that is related to its claims against him, jurisdiction is not
proper.
III. Conclusion
We conclude that the district court reversibly erred as a
matter of law in deciding that it had personal jurisdiction over
Michelson. As such, the preliminary injunction issued by the court
is a nullity. We therefore reverse the district court, vacate and
dissolve the preliminary injunction issued by that court, and
remand this case to that court with instructions to dismiss
Maxxim’s action, without prejudice for lack of personal
jurisdiction.
18
See Bullion v. Gillespie, 895 F.2d 213, 216 (5th Cir. 1990).
19
Felch v. Transportes Lar-Mex SA de CV, 92 F.3d 320, 325 (5th
Cir. 1996).
8
REVERSED; PRELIMINARY INJUNCTION VACATED and DISSOLVED; REMANDED
with instructions.
9