Digi-Tel Holdings v. Proteq Telecom. ( 1996 )

___________
No. 95-2853
___________
Digi-Tel Holdings, Inc., *
*
Appellant, *
* Appeal from the United States
v. * District Court for the District
* of Minnesota.
Proteq Telecommunications *
(PTE), Ltd., *
*
Appellee. *
--------------------------------
Brustuen International, Inc., *
*
Intervenor. *
___________
Submitted: March 13, 1996
Filed: July 11, 1996
___________
Before FAGG, BRIGHT, and WOLLMAN, Circuit Judges.
___________
BRIGHT, Circuit Judge.
Digi-Tel Holdings, Inc. (Digi-Tel) appeals the order of the district
court1 dismissing its breach of contract and fraud claims against Proteq
Telecommunications (PTE), Ltd. (Proteq) for lack of personal jurisdiction.
The district court held that the exercise of personal jurisdiction over
Proteq, a Singapore company, was not consistent with due process because
Proteq did not have sufficient "minimum contacts" with the State of
Minnesota. We affirm.
1
The Honorable David S. Doty, United States District Judge for
the District of Minnesota.
I. BACKGROUND
Proteq, a Singapore company, is a wholly-owned subsidiary of
Proteq Technologies PTE, Ltd., a Singapore company, which in turn is a
wholly-owned subsidiary of Goldtron, Ltd., also a Singapore company. Since
its incorporation on July 16, 1992, Proteq's business has been the research
and development of telecommunication products. Proteq does not maintain
any offices, have any employees, or own any property in Minnesota. There
is no evidence that Proteq has ever solicited business or advertised in
Minnesota. Proteq is not licensed to do business in Minnesota and has no
personnel or agents authorized to accept process within Minnesota.
Major Computer Incorporated (Major), a Minnesota corporation,
enlisted the assistance of Brustuen International, Inc., a Minnesota-based
international trade consulting firm, in an effort to locate a manufacturing
source of cellular telephones. As a result of these efforts, in the summer
of 1992, Major entered into an agreement to purchase up to 240,000 cellular
phones from Proteq. There were seven face-to-face meetings between Proteq
and Major regarding developing and selling the cellular phones, all of
which took place in Singapore. On one of these occasions, Major's Vice
President obtained a sample cellular phone, and Proteq sent four additional
samples to Major in Minnesota. The parties exchanged dozens of letters and
faxes and numerous phone calls in connection with the sales agreement.
The Proteq/Major agreement provided that the agreement would be
construed and governed by Minnesota law. Under the terms of the contract,
Major would assume control of the phones while they were still in
Singapore. The sales agreement provided the price as "F.O.B. Singapore."
Delivery of the phones was expected to begin sometime late in 1992. The
duration of the contract was the later of two years or 240,000 units. In
addition, Major had the option to renew under certain conditions.
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Proteq encouraged Major to re-sell the phones to Major's customers
before they were manufactured. Less than one month after signing its
agreement with Proteq, Major contracted to sell these same cellular phones
to Digi-Tel.
In December of 1992, Goldtron (the parent company of Proteq) applied
to the Minnesota Secretary of State for registration of the trademark
"Goldtron." Goldtron obtained a "Certificate of Registration of Mark."2
The application extended to a range of products including cellular phones
and audio and security equipment. Proteq mailed a copy of the trademark
certificate to Major shortly after the certificate was obtained. The
sample phone which Proteq had sent to Major in July of 1992 bore the mark
"Goldtron", and Proteq admits that it considered using "Goldtron" as the
trademark on the phone.
Proteq never delivered cellular phones to Major, and Major was unable
to fulfill its agreement with Digi-Tel. Digi-Tel filed suit against Major
for breach of the Major/Digi-Tel agreement. Major subsequently experienced
financial difficulties which resulted in Major's secured creditor
foreclosing on its assets.
In December of 1993, an employee of Goldtron and an employee of a
Hong Kong subsidiary of Goldtron traveled to Minnesota to meet with
representatives of Digi-Tel. At the meeting they discussed the possibility
of enlisting Digi-Tel to help in obtaining FCC approval of a cellular phone
and for marketing and distributing the phone. The phone was a different
model than that envisioned under the Proteq/Major agreement. They
delivered samples of the phone to
2
Under Minnesota law, a Certificate "shall be admissible in
evidence as competent and sufficient proof of the registration of
such mark, in any action or judicial proceedings in any court of
[Minnesota] and shall be prima facie evidence of registrant's
ownership and exclusive right to use the mark on or in connection
with the goods or services described in the certificate." Minn.
Stat. § 333.21.
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the Digi-Tel representatives. They also offered Digi-Tel $100,000 to
resolve Digi-Tel's claims against Proteq.3 Digi-Tel declined the offer.
Digi-Tel subsequently filed suit against Proteq for fraud and breach
of contract. Digi-Tel acquired Major's interest in the Proteq/Major
agreement from Major's secured creditor. Digi-Tel commenced the action
against Proteq as a third-party beneficiary of the Major/Proteq agreement
and as the assignee of Major's rights under that agreement. Digi-Tel
served Proteq under Minnesota long-arm statute § 303.13. Following a
hearing on June 30, 1995, at which no live testimony was presented, the
district court granted Proteq's motion to dismiss for lack of personal
jurisdiction. The district court determined that the exercise of personal
jurisdiction over Proteq would violate due process because Proteq lacked
sufficient minimum contacts with the State of Minnesota. Digi-Tel
appealed.
II. DISCUSSION
To survive a motion to dismiss for lack of personal jurisdiction, the
plaintiff need only make a prima facie showing of personal jurisdiction
over the defendant. Northrup King Co. v. Compania Productora Semillas
Algodoneras Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir. 1995); Bell Paper
Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir. 1994); Watlow
Elec. Mfg. Co. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir. 1988).
For the purposes of a prima facie showing, the court must view the evidence
in the light most favorable to the plaintiff and resolve all factual
conflicts in the plaintiff's favor. Dakota Indus., Inc. v. Dakota
Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991). We
3
Although Proteq denies that such an offer was made, for the
purposes of establishing a prima facie showing of jurisdiction, we
assume the existence of such an offer.
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review de novo whether the plaintiff has presented a prima facie case of
personal jurisdiction. Bell Paper Box, Inc. v. Trans Western Polymers,
Inc., 53 F.3d 920, 921 (8th Cir. 1995); Northrup King, 51 F.3d at 1387.
In deciding whether a court has personal jurisdiction over a non-
resident defendant, this court is guided by two primary rules. First, the
facts presented must satisfy the requirements of the forum state's long-arm
statute. Second, the exercise of personal jurisdiction over the defendant
must not violate due process. Northrup King, 51 F.3d at 1387. Because the
district court concluded that due process would be violated if personal
jurisdiction were conferred over Proteq, it did not reach the issue of
whether or not the requirements of the Minnesota long-arm statute were met.
Due process mandates that jurisdiction be exercised only if defendant
has sufficient "minimum contacts" with the forum state, such that summoning
the defendant to the forum state would not offend "``traditional notions of
fair play and substantial justice.'" International Shoe Co. v. Washington,
326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463
(1940)). To maintain personal jurisdiction, defendant's contacts with the
forum state must be more than "random," "fortuitous," or "attenuated."
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). Sufficient
contacts exist when "the defendant's conduct and connection with the forum
State are such that he should reasonably anticipate being haled into court
there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
In assessing the defendant's reasonable anticipation, there must be "``some
act by which the defendant purposefully avails itself of the privilege of
conducting activities within the forum State, thus invoking the benefits
and protections of its laws.'" Burger King, 471 U.S. at 475 (quoting
Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Jurisdiction is proper where
the contacts proximately result from
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actions by the defendant itself that create a "substantial connection" with
the forum State. Id.
In conjunction with these basic principles of due process, this court
applies a five-factor test in analyzing the constitutional requirements
needed for personal jurisdiction: (1) the nature and quality of the
contacts with the forum state; (2) the quantity of contacts with the forum;
(3) the relation of the cause of action to these contacts4; (4) the
interest of the forum state in providing a forum for its residents; and (5)
the convenience of the parties. Wessels, Arnold & Henderson v. Nat'l
Medical Waste, Inc., 65 F.3d 1427, 1432 (8th Cir. 1995); Trans Western
Polymers, 53 F.3d at 922; Aaron Ferer & Sons Co. v. Diversified Metals
Corp., 564 F.2d 1211, 1215 (8th Cir. 1977). The first three factors are
of primary importance, and the last two are "secondary factors." Minnesota
Min. and Mfg. Co. v. Nippon Carbide Indus. Co., 63 F.3d 694, 697 (8th Cir.
1995), cert. denied, 116 S. Ct. 1288 (1996); Northrup King, 51 F.3d at 1388.
Because the first three factors are closely interrelated, we consider them
together.
Digi-Tel has established the existence of certain contacts between
Proteq and the forum. First, Proteq sent numerous letters and faxes and
made several telephone calls to Minnesota in
4
This third factor distinguishes whether the jurisdiction is
specific or general. Wessels, Arnold & Henderson v. National
Medical Waste, Inc., 65 F.3d 1427, 1432 n.4 (8th Cir. 1995); Bell
Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 819 (8th Cir.
1994). 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.
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 nn.8 & 9 (1984). The alleged contacts in the present action
are related to the dispute that resulted in this suit, and
therefore we have an assertion of specific rather than general
jurisdiction.
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connection with the Proteq/Major contract. Second, the contract contains
a Minnesota choice-of-law provision. Although letters and faxes may be
used to support the exercise of personal jurisdiction, they do not
themselves establish jurisdiction. Wessels, Arnold & Henderson, 65 F.3d
at 1433; Northrup King, 51 F.3d at 1388; Mountaire Feeds, Inc. v. Agro
Impex, S.A., 677 F.2d 651, 656 (8th Cir. 1982). Similarly, although a
choice-of-law provision may be considered for jurisdictional purposes as
it may "reinforc[e] (defendant's) deliberate affiliation with the forum
State and the reasonable foreseeability of possible litigation there[,]"
Burger King, 471 U.S. at 482, it is insufficient in itself to confer
jurisdiction. Id.; Wessels, Arnold & Henderson, 65 F.3d at 1434. We agree
with the district court that, in the circumstances of this case, these
contacts do not create a "substantial connection" to Minnesota sufficient
to subject Proteq to personal jurisdiction in the state.5
Digi-Tel cites Proteq's shipment of four sample cellular phones to
Major in Minnesota as another contact with the forum
5
Digi-Tel also argues that the agreement was "effectively
executed" in Minnesota. The contract provides:
Acceptance of this Agreement shall be constituted by
receipt of this document by MAJOR, it being effectively
executed by the legal representatives of PROTEQ at the
office of Major . . . before 10:00 am, CST, the 13th
August 1992 or by receipt of this document by its
signors, it being fully executed. It shall become
effective at the time and date of acceptance.
(A-57). Digi-Tel argues that Proteq thus specifically agreed that
the contract would be deemed executed by Proteq's representatives
in Minnesota. Proteq asserts that the provision allows two
alternative modes of acceptance. Proteq argues that the second
mode of acceptance, "by receipt of this document by its signors, it
being fully executed," was the method employed in this case. We
merely observe that, "[t]he [United States Supreme] Court long ago
rejected the notion that personal jurisdiction might turn on
``mechanical' tests or on ``conceptualistic . . . theories of the
place of contracting or of performance.'" Burger King, 471 U.S. at
478 (citations omitted).
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state. While this shipment of samples has relevance, its effect is
minimal. We observe that on another occasion, Major's Vice President
picked up a sample phone while in Singapore. The shipment of the samples
into the forum represents a "casual" or "fortuitous" contact rather than
a significant contact with the forum. See International Shoe, 326 U.S. at
320; Burger King, 471 U.S. at 475.
Digi-Tel also argues that the district court erred by refusing to
impute Goldtron's contacts with Minnesota to Proteq.6 In determining
whether "minimum contacts" exist, contacts with the forum state that are
made on behalf of the defendant by others may be considered. The Supreme
Court has indicated that "when commercial activities are ``carried on in
behalf of' an out-of-state party those activities may sometimes be ascribed
to the party, at least where [it] is a ``primary participan[t]' in the
enterprise and has acted purposefully in directing those activities."
Burger King, 471 U.S. at 479 n.22 (citations omitted). In U.S. Kids, Inc.,
22 F.3d 816, this court considered a visit by an independent
6
Proteq asserts that Digi-Tel did not raise this attribution
theory in the district court and should not be allowed to present
it on appeal. Proteq asserts that Digi-Tel raised a "piercing the
corporate veil" argument in the district court and presented its
theory that contacts initiated "on behalf of" Proteq should be
attributable to it for the first time on appeal. Upon review of
the record, however, we conclude that Digi-Tel did make a general
claim that Goldtron's two contacts with Minnesota should be
attributed to Proteq. Digi-Tel has submitted no new facts on
appeal. Under these circumstances we will consider Digi-Tel's
attribution argument. See Shannon v. Ford Motor Co., 72 F.3d 678,
684 (8th Cir. 1996) (rule that appellate courts do not consider
arguments raised for first time on appeal is "``not a flat rule but
rather a matter of prudence and discretion'") (quoting Struempler
v. Bowen, 822 F.2d 40, 42 (8th Cir. 1987)); Universal Title Ins.
Co. v. United States, 942 F.2d 1311, 1314 (8th Cir. 1991) ("'We
think it would be in disharmony with one of the primary purposes of
appellate review were we to refuse to consider each nuance or shift
in approach urged by a party simply because it was not similarly
urged below.'")(quoting In re Osweiler, 346 F.2d 617, 621 (C.C.P.A.
1965)).
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businessman on behalf of the defendant to plaintiff's place of business as
a contact between defendant and the forum. The court noted that the
businessman lacked any independent relationship with the plaintiff and had
no reason to visit plaintiff's business other than as defendant's agent.
Id. at 819 n.1.
In December of 1992, Goldtron (Proteq's parent company) applied for
a Minnesota copyright, and in December of 1993 two Goldtron representatives
visited Digi-Tel in Minnesota. Although Digi-Tel argues that these
contacts should be imputed to Proteq, it fails to produce evidence
sufficient to support the inference that Goldtron's activities were
directed by or primarily for the benefit of Proteq. First, there is
insufficient factual support in the record to create an inference that the
December 1992 Minnesota trademark application was filed at the direction
of or primarily for the benefit of Proteq. In May of 1992, "Goldtron" was
the new name of the Singapore corporation, Gold Coin Limited. Later that
year, Goldtron began a worldwide effort to register its new trademark.
Furthermore, the Minnesota trademark covered a range of products including
not only cellular phones, but also mobile fax machines, digital compact
cassette players and security equipment.7
In December of 1993, two representatives of Goldtron travelled to
Minneapolis, Minnesota to meet with representatives of Digi-Tel. One of
Goldtron's representatives later drafted an internal memorandum which
listed three purposes for the visit:
7
Digi-Tel points to the fact that Proteq sent Major a copy of
the trademark application as evidence of the fact that Goldtron
obtained the trademark on behalf of Proteq. The fax accompanying
the certificate stated simply, "Attached Certificate of
Registration of Mark for ``GOLDTRON' in USA for your info and file."
(A-43-44). There is no indication that the registration was
obtained for the Proteq/Major transaction or for the benefit of
Proteq.
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1) To hand carry our cellular phone for FCC Approval
2) To re-establish our relationship with DIGI-TEL as a
marketing and distribution agent for the said cellular
phone
3) To obtain information on DIGI-TEL's legal action against
Major Computers Inc.
(A-251). Digi-Tel also claims that at the meeting, the Goldtron
representatives offered Digi-Tel $100,000 to resolve Digi-Tel's legal
claims. Digi-Tel rejected the offer.
Digi-Tel, however, again fails to produce evidence sufficient to
support the inference that the meeting in Minnesota was not for Goldtron's
own business purposes but was directed by or primarily for the benefit of
Proteq. First, the sample phone provided to Digi-Tel at the Minnesota
meeting had a different design than the cellular phone being developed by
Proteq. The phone was developed under a joint venture between another
Goldtron subsidiary and a Taiwanese business. Furthermore, after the
meetings, Digi-Tel and Goldtron executed a document which specified,
"Goldtron, Ltd. represents and acknowledges that it is not supplying the
above described cellular telephones pursuant to its contract with Major .
. . and the contract between Major and Digi-Tel." (A-2245).
Secondly, as to the discussion of a possible settlement, courts have
hesitated to use unsuccessful settlement discussions as "contacts" for
jurisdictional purposes. See Minnesota Min. and Mfg. Co., 63 F.3d at 698;
Conwed Corp. v. Nortene, S.A., 404 F. Supp. 497, 504-505 (D. Minn. 1975).
Giving jurisdictional significance to such activities may work against
public policy by hindering the settlement of claims. Regardless, even
including any negotiations concerning the contractual dispute between Digi-
Tel and Major, which indirectly involved Proteq, Digi-Tel has failed to
provide evidence to support the inference that the meeting was conducted
primarily for the benefit or at the direction of Proteq.
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The series of events culminating in this suit began with Major
seeking out a manufacturing source for cellular phones. All seven of the
face-to-face meetings regarding Proteq's sale of cellular phones to Major
took place in Singapore. No part of the contract was to be performed in
Minnesota. See Wessels, Arnold & Henderson, 65 F.3d at 1433. Proteq was
to develop and produce the phones overseas and transfer ownership to Major
in Singapore. The delivery term was "F.O.B. Singapore" which means that
the seller was obligated to deliver to Singapore and nowhere else. See,
U.S. Kids, Inc., 22 F.3d at 819. We pause to emphasize that no shipment
of actual product came into Minnesota. The only domestic element of the
agreement related to the interpretation of the contract under Minnesota
law.
Thus the negotiations, meetings, production, and delivery were all
centered in Singapore. The contacts with Minnesota appear at best as
inconsequential rather than substantial under these circumstances. Proteq
did not create a substantial connection between itself and Minnesota, it
merely engaged in negotiations with a purchaser who happened to reside in
Minnesota. Given the nature and quality of Proteq's contacts with
Minnesota, traditional notions of fair play and substantial justice
indicate that the corporation in Singapore would not expect to litigate in
the State of Minnesota.
Our consideration of the "secondary factors" does not change this
conclusion. First, we note that Minnesota has an obvious interest in
providing a local forum in which its residents may litigate claims against
non-residents. However, Minnesota's interest in providing its residents
with a forum cannot make up for the absence of minimum contacts. See
Falkirk Min. Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 376 (8th Cir.
1990). The convenience of the parties favors neither side. Witnesses are
in both Minnesota and Singapore. Finally, as the United States Supreme
Court stated in Asahi Metal Indus. Co. v. Superior Court of
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California, 480 U.S. 102, 115 (1987), "``Great care and reserve should be
exercised when extending our notions of personal jurisdiction into the
international field.'" (quoting United States v. First Nat'l City Bank, 379
U.S. 378, 404 (1965) (Harlan, J. dissenting)). See also Falkirk Min. Co.,
906 F.2d at 376 ("The careful inquiry we are required to make before
exercising jurisdiction over foreign defendants supports our conclusion
that no personal jurisdiction exists here, especially given the absence of
minimum contacts between appellees and the [forum].").
III. CONCLUSION
Accordingly, we affirm the order of the district court dismissing the
complaint for lack of personal jurisdiction.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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