Burlington Ind. v. Maples Ind. ( 1996 )

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No. 95-3527
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Burlington Industries, Inc. *
* Appeal from the United States
Appellee, * District Court for the Eastern
* District of Arkansas.
v. *
*
Maples Industries, Inc. *
*
Appellant. *
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Submitted: June 12, 1996
Filed: October 9, 1996
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Before WOLLMAN, Circuit Judge, MORRIS SHEPPARD ARNOLD, Circuit
Judge, and ROSENBAUM,* District Judge.
ROSENBAUM, District Judge.
Burlington Industries, Inc. (“Burlington”), and Maples Industries,
Inc. (“Maples”), compete in the manufacture of carpets and rugs.
Burlington brought this diversity action, claiming Maples misappropriated
a valuable yarn space-dye trade secret, when it purchased machines
incorporating the trade secret from a third-party.
On May 26, 1995, the district court denied Maples’ motion to dismiss
the action for lack of personal jurisdiction. The district court,
thereafter, granted partial summary judgment in favor of Burlington, and
entered a preliminary injunction prohibiting the use of the space-dye
machines.
*
The HONORABLE JAMES M. ROSENBAUM, United States District
Judge for the District of Minnesota, sitting by designation.
Maples appeals the denial of its motion to dismiss and the grant of
partial summary judgment. The entry of a preliminary injunction is an
appealable order, conferring jurisdiction on this Court, see 28 U.S.C. §
1292(a)(1), and the personal jurisdiction determination may be reviewed at
this time. See Land-O-Nod Co. v. Bassett Furniture Indus., Inc., 708 F.2d
1338, 1340 (8th Cir. 1983). On review, we reverse the district court’s
finding of personal jurisdiction, and in the absence thereof, we vacate the
district court’s subsequent order.
I.
Burlington is a Delaware corporation with its principal place of
business in North Carolina. Maples is an Alabama corporation with its
principal place of business in Alabama. The companies sell their products
to national retailers.
In the fall of 1992, Maples hired a third-party, Bobby Vinson and
Associates, Inc. (“BVA”), to service machinery at its Scottsboro, Alabama,
manufacturing facility. BVA is an Arkansas corporation with its principal
place of business in Arkansas. Three of Burlington’s former employees, who
are claimed to have had access to confidential Burlington information, were
later employed by BVA.
Maples purchased two space-dye machines from BVA in October, 1992,
and two others in April, 1993. Burlington contends these four machines
incorporate its manufacturing trade secret, allowing economical dyeing of
yarn strands in multiple colors at different intervals. The contracts for
the sale of these machines were negotiated and executed in Alabama. BVA
assembled the machines in Arkansas and shipped them to Maples in Alabama.
At no time did a Maples’ representative visit BVA’s Arkansas facility to
negotiate the sales.
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Burlington has previously defended its trade secrets in two other
federal actions. See Burlington Indus., Inc. v. Bobby Vinson & Assoc.,
Inc., No. LR-C-93-604 (E.D. Ark. 1993); Burlington Indus., Inc. v. Palmetto
Spinning Corp., No. CA-95-1467-6-3 (D.S.C. 1995), aff’d, 76 F.3d 371 (4th
Cir. 1996) (tbl.).
II.
We review questions of personal jurisdiction de novo. Barone v. Rich
Bros. Interstate Display Fireworks Co., 25 F.3d 610, 612 (8th Cir.), cert.
denied sub nom. Hosoya Fireworks Co. v. Barone, 115 S. Ct. 359 (1994).
When personal jurisdiction is challenged, the plaintiff has the burden to
show jurisdiction exists. Gould v. P.T. Krakatau Steel, 957 F.2d 573, 575
(8th Cir.), cert. denied, 506 U.S. 908 (1992).
In a diversity action, a federal court may assume jurisdiction over
nonresident defendants only to the extent permitted by the long-arm statute
of the forum state, and by the due process clause of the Fourteenth
Amendment. Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th
Cir. 1994). We have previously recognized that the Arkansas long-arm
statute authorizes jurisdiction over foreign corporations to the fullest
extent allowed by constitutional due process. Mountaire Feeds, Inc. v.
Agro Impex, S.A., 677 F.2d 651, 653 (8th Cir. 1982). Therefore, our
inquiry devolves into the single question whether the exercise of personal
jurisdiction comports with due process.
Due process requires “minimum contacts” between the non-resident
defendant and the forum state such that “maintenance of the suit does
not offend traditional notions of fair play and substantial
justice." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
291 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945). The defendant’s conduct and connection with the forum
state must be such that defendant should “reasonably
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anticipate being haled into court there.” World-Wide Volkswagen,
444 U.S. at 297.
We have established a five-factor test -- the first three
factors being of primary importance -- to determine the sufficiency
of defendant’s contacts. We must determine: (1) the nature and
quality of contacts with the forum state; (2) the quantity of such
contacts; (3) the relation of the cause of action to the contacts;
(4) the interest of the forum state in providing a forum for its
residents; and (5) convenience of the parties. Land-O-Nod, 708
F.2d at 1340. We have further elaborated on the third factor --
the relationship of the cause of action to the contacts -- to
distinguish between specific and general jurisdiction. Bell Paper
Box, 22 F.3d at 819 (citing Helicopteros Nacionales de Colombia,
S.A. v. Hall, 466 U.S. 408, 414 nn.8-9 (1984)).
Specific jurisdiction refers to jurisdiction over causes
of action arising from or related to a defendant’s
actions within the forum state while general jurisdiction
refers to the power of a state to adjudicate any cause of
action involving a particular defendant, regardless of
where the cause of action arose.
Id. (internal alterations omitted).
General jurisdiction refers to the power of a state to
adjudicate any cause of action and does not depend on the
relationship between the cause of action and the contacts.
Wessels, Arnold & Henderson v. National Medical Waste, Inc., 65
F.3d 1427, 1432 n.4 (8th Cir. 1995). Where specific personal
jurisdiction over a non-resident is asserted, due process is
satisfied if the defendant has purposely directed its activities at
forum residents, and the litigation results from injuries arising
out of, or relating to, those activities. Id.
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A. Factors 1, 2, and 3
Maples has few Arkansas contacts. It has no no place of
business in Arkansas, and is not registered as a foreign
corporation to do business in the state. It has no offices,
inventory, bank accounts, real estate, personal property,
employees, or agents in Arkansas. While the space-dye machines, of
which Burlington complains, were built and shipped from Arkansas,
no Maples employee was sent to BVA’s Arkansas headquarters to
negotiate their purchase or supervise their manufacture.
Maples has had insufficient contacts to support a finding of
general jurisdiction. Maples’s products were sold to Arkansas
retailers, including Wal-Mart, and Maples’ officers have traveled
to Arkansas to obtain the Wal-Mart account. Maples’ space-dye
machines were used to dye yarn incorporated into products sold,
either retail sales or by catalogue, in Arkansas. Such facts,
however, simply mean that Maples functions as a
manufacturer/merchant which sells goods through non-parties in the
state of Arkansas. Simple commercial contacts, unrelated to
Burlington’s trade secret claims are insufficient to establish
personal jurisdiction.
Telephone calls -- numbering at least 100 -- between Maples
and BVA can be evidence of a continuous and systematic business
relationship. But while phone contacts remain a consideration,
they are insufficient, alone, to confer personal jurisdiction.
Wessels, Arnold & Henderson, 65 F.3d at 1433; Mountaire Feeds, 677
F.2d at 656. We find that Maples has insufficient contacts to
support a finding of specific personal jurisdiction.
B. Factors 4 and 5
The secondary Land-O-Nod factors do not support a finding of
personal jurisdiction. Maples has not purposefully availed itself
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of the protections of Arkansas law by the commercial sale of its
goods or by purchasing four machines manufactured in that state.
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Similarly, the convenience of the parties factor is neutral.
Arkansas is convenient for Burlington; less so for Maples. We note
that Burlington has previously commenced an action in South
Carolina on a similar claim of trade secret protection. This fact
suggests that Burlington will not be inconvenienced by suit beyond
its corporate home. An Arkansas forum is not required to resolve
this dispute between two sophisticated national commercial
enterprises.
III.
Maples has insufficient contacts with Arkansas to confer
personal jurisdiction. Its limited commercial activities in
Arkansas are insufficient to confer general jurisdiction in
Arkansas. Its beyond-Arkansas-borders machine purchases from an
Arkansas vendor are insufficient to provide specific jurisdiction
on these facts.
Accordingly, we reverse the district court’s finding of
personal jurisdiction over Maples. This matter is remanded to the
district court for dismissal, based upon lack of personal
jurisdiction.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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