Romak USA v. Marc Rich ( 2004 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 03-3074
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Romak USA, Inc., a Kansas Corporation,*
*
Appellant, *
*
v. * Appeal from the United States
* District Court for the
Marc Rich; Marc Rich & Co., * Western District of Missouri
Holding GMBH, a Swiss Corporation, *
formerly known as Marc Rich & Co. *
Holding AG, *
*
Appellees. *
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Submitted: April 15, 2004
Filed: September 24, 2004
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Before WOLLMAN, McMILLIAN and RILEY, Circuit Judges.
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McMILLIAN, Circuit Judge.
Romak USA, Inc., a Kansas corporation, appeals from a final judgment of the
District Court for the Western District of Missouri1 dismissing its claims against Marc
Rich, a citizen of Switzerland and Israel, because of lack of personal jurisdiction and
1
The Honorable Fernando J. Gaitan, United States District Judge for the
Western District of Missouri.
dismissing with prejudice its claims against Marc Rich & Co., Holding GmbH, a
Swiss corporation (Rich & Co. Holding). We affirm.
BACKGROUND
For the purposes of this appeal, we view the evidence and all reasonable
inferences therefrom in the light most favorable to Romak USA. In so viewing, the
evidence is as follows.2 In the early 1980s Dr. Milan Sladek formed Romak SA, a
grain trading firm in Geneva, Switzerland. Romak SA was the parent company, sole
shareholder, and credit guarantor of Romak USA, a grain trading company
incorporated in Kansas, with its principal place of business in Kansas City, Missouri.
In May 1997, after Romak SA suffered losses on grain sales, its banker
recommended that Sladek sell Romak SA and its subsidiaries, including Romak USA.
The banker suggested Rich & Co. Holding, another Swiss trading firm, as a potential
buyer. Sometime that month, Sladek met in Switzerland with representatives of
Rich & Co. Holding, including Marc Rich. Sladek invited Rich & Co. Holding
officials to conduct a due diligence audit of all Romak companies. Romak USA and
Rich & Co. Holding agreed that any contact with Romak employees would be for the
sole purpose to determine whether Romak SA and its subsidiaries were candidates for
acquisition. In June 1997, Sladek told Romak USA’s president, Stephen Wilde, about
the possible sale of Romak SA to Rich & Co. Holding.
Negotiations continued throughout the summer of 1997. In August 1997, Marc
Rich had a telephone conversation with Romak USA’s vice-president, Albert
Conway. Marc Rich told Conway about the negotiations and about his interest in
2
Because of the state of the record on appeal, we cannot be certain that the
names of several corporate entities are complete or technically accurate. Any
misstatement of such corporate names does not affect the disposition of the appeal.
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establishing a grain trading company in the United States. From the conversation,
Conway understood that if he wanted a position with the new Marc Rich company,
he should stay at Romak USA.
By memo dated August 27, 1997, Wilde informed Romak USA employees that
he spoke to Sladek on August 25 and Sladek had informed him that the Romak
companies were being “sold and reorganized into the Marc Rich group of
companies.” Wilde also informed the employees that Romak USA would begin to
shut down.
Also, in the summer of 1997, Rich & Co. Holding was negotiating to acquire
Glibro Trading Holding and affiliated entities (Glibro). Frank Gleeson was one of
the owners of Glibro. On August 21, 1997, Glibro and Rich & Co. Holding began
integrating. After the sale closed in October 1997, the new venture was known as
Novarco Agricultural Limited (Novarco), a subsidiary of Rich & Co. Holding.
Donald Novotny was the president of the United States branch of Novarco. Gleeson
became the chief executive officer of Marc Rich Agricultural and, after six months,
chief executive officer of Marc Rich Investment. Some time after August 21, 1997,
at the request of Marc Rich, Gleeson participated in the negotiations between Romak
SA and Rich & Co. Holding.
On September 15, 1997, Gleeson called Wilde to tell him that the negotiations
between the “Marc Rich Group” and Romak SA were not going well. On that date,
Wilde terminated a trader, Paul Frick, who began working for Glibro. On
September 18, 1997, Gleeson again telephoned Wilde to inform him that the “Marc
Rich Group” was not going to buy Romak SA, but instead would buy the assets of
Romak USA. During the conversation Gleeson also told Wilde that “Sladek had
given the Marc Rich Group the authority to negotiate directly with Romak USA
employees regarding their employment with the anticipated Marc Rich venture in
America” and that Romak USA employees would be hired by the new venture.
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In a September 19, 1997, fax, Wilde informed Sladek that he was prepared to
liquidate Romak USA. On September 25, 1997, based on Gleeson’s representations
and a September 18, 1997, fax by Sladek, Wilde terminated himself and Conway. On
October 3, 1997, Sladek informed Wilde that Romak USA should not be liquidated.
However, Wilde continued to “negotiate with the Marc Rich Group regarding [its
new] American venture.” In early October 1997, Gleeson and Novotny traveled to
Kansas City, Missouri, and offered Wilde and Conway employment with Novarco.
Eventually, Novarco bought Romak USA assets.
In March 1998, Romak USA filed a lawsuit in Missouri state court against
Wilde, Conway, and Frick, alleging breach of fiduciary duty and conspiracy. The
complaint asserted that because of the defendants’ actions Romak SA was forced to
sell Romak USA “to the Marc Rich Group at a significantly reduced price.” Romak
USA later dismissed the action.
In October 2001, Romak USA filed this diversity action in federal district court
against Marc Rich and Rich & Co. Holding. Specifically, the complaint alleged that
during August and September 1997, “Marc Rich individually, and Rich & Co.
Holding, through its agents Marc Rich and Gleeson,” made false representations to
Romak USA and that “Marc Rich, individually, and Rich & Co. Holding, through its
agents Marc Rich and Gleeson,” had tortiously interfered with Romak USA’s
business and contractual relationships with its employees. The complaint also alleged
that “Marc Rich, individually, and Rich & Co. Holding” conspired to tortiously
interfere with contractual and business relationships.
In February 2002, Marc Rich filed a motion to dismiss for lack of personal
jurisdiction. Among other things, he submitted Conway’s affidavit, in which Conway
stated:
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In August 1997, while I was still employed by Romak
USA, Mr. Marc Rich let me know he was having
discussions with Romak S.A. about his interests in
establishing a grain trading company and having an office
in the United States. I understood from our conversation
that I should stay at Romak U.S.A. and this would position
me to have an opportunity to work for the new Marc Rich
grain company in the United States.
Romak USA opposed the motion, asserting that Marc Rich and his agents,
Gleeson and Novotny, had sufficient contacts with Missouri to satisfy the state’s
long-arm statute and federal due process requirements, submitting deposition excerpts
and affidavits from the dismissed state case.
In August 2002, the district court granted Marc Rich’s motion to dismiss. The
district court held that Romak USA had failed to produce evidence that Marc Rich
had sufficient minimum contacts with Missouri to satisfy due process. The district
court also held that Romak USA failed to present evidence that Gleeson and Novotny
were the personal agents of Marc Rich.
In August 2002, the district court granted Rich & Co. Holding’s motion to
strike Romak USA’s expert witness reports on lost profits. In June 2003, Romak
USA moved to dismiss its claims against Rich & Co. Holding without prejudice.
However, in its motion, Romak USA stated that it did not “intend to pursue Rich &
Co. Holding in any future litigation.” The district court dismissed the claims against
Rich & Co. Holding, but did so with prejudice. This appeal follows.
DISCUSSION
We review the personal jurisdiction issue de novo. Dever v. Hentzen Coatings,
Inc., No. 03-3695, 2004 WL 1872710, at *1 (8th Cir. Aug. 23, 2004) (Dever). As
Romak USA points out, “[t]o defeat a motion to dismiss for lack of personal
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jurisdiction, the nonmoving party need only make a prima facie showing of
jurisdiction[,]” and may do so by affidavits, exhibits, or other evidence. Epps v.
Stewart Info. Serv. Corp., 327 F.3d 642, 647 (8th Cir. 2003) (Epps). Although we
must view the evidence in the light most favorable to Romak USA and resolve factual
conflicts in its favor, as “[t]he party seeking to establish the court’s in personam
jurisdiction[,] [it] carries the burden of proof, and the burden does not shift to the
party challenging jurisdiction.” Id.
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.” Dever, 2004 WL 1872710, at *1. As
relevant here, the Missouri long-arm statute provides for personal jurisdiction over
“[a]ny person . . . who in person or through an agent . . . commi[ts] a tortious act
within the state[,]” as to a cause of action arising from the commission of the act.
Mo. Rev. Stat. § 506.500.1(3).
Because “the Missouri long-arm statute authorizes the exercise of jurisdiction
over non-residents to the extent permissible under the due process clause, we turn
immediately to the question whether the assertion of personal jurisdiction would
violate the due process clause.” Porter v. Berall, 293 F.3d 1073, 1075 (8th Cir. 2002)
(internal quotation omitted); see also Dever, 2004 WL 1872710, at *1 (“Because the
long-arm statute of Arkansas confers jurisdiction to the fullest constitutional extent,
our inquiry is limited to whether the exercise of personal jurisdiction comports with
due process.”) (internal citation omitted).3 To satisfy due process a defendant must
3
As Marc Rich points out, in some cases we have analyzed personal jurisdiction
by first considering “whether the state of Missouri would accept jurisdiction under
the facts of this case[,]” and then considering whether the exercise of jurisdiction
would offend due process. Lakin v. Prudential Sec., Inc., 348 F.3d 704, 706-07 (8th
Cir. 2003). Under that analysis, we agree with Marc Rich that he did not commit a
tortious act in Missouri, and thus the district court lacked jurisdiction.
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have sufficient minimum contacts with the forum state “such that ‘maintenance of the
suit does not offend traditional notions of fair play and substantial justice.’” Id., at
*2 (quoting Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th
Cir. 1996)). More particularly, 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.’” Id. (quoting Hanson v.
Denckla, 357 U.S. 235, 253 (1958)).
Moreover, in a case such as this involving specific personal jurisdiction,
“jurisdiction is viable only if the injury giving rise to the lawsuit occurred within or
had some connection to the forum state.” Id. In other words, the cause of action must
“‘arise out of’ or ‘relate to’ a defendant’s activities within a state.” Lakin v. Prudential
Sec., Inc., 348 F.3d 704, 707 (8th Cir. 2003) (Lakin) (quoting Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 (1985)).4 In determining whether the district had
personal jurisdiction over Marc Rich, we will consider “(1) the nature and quality of
[his] contacts with [Missouri]; (2) the quantity of such contacts; (3) the relation of the
cause of action to the contacts; (4) the interest of [Missouri] in providing a forum for
its residents; and (5) [the] convenience of the parties.” Dever, 2004 WL 1872710,
at *2 (internal quotation omitted). We give “significant weight . . . to the first three
factors.” Id.
Romak USA argues that Marc Rich had sufficient minimum contacts in
Missouri, citing Conway’s affidavit describing an August 1997 telephone
conversation he had with Marc Rich. The affidavit does not suffice. In this case, the
affidavit does not even establish that Marc Rich placed the telephone call to Conway
4
A court may also exercise general personal jurisdiction over a “defendant who
who has continuous and systematic contacts with the forum state, even if the injuries
at issue in the lawsuit did not arise out of the defendant’s activities directed at the
forum.” Dever v. Hentzen Coatings, Inc., No. 03-3695, 2004 WL 1872710, at *2 (8th
Cir. Aug. 23, 2004) (internal quotation marks omitted).
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in Missouri. Conway did not state who placed the call or where the conversation took
place. In any event, considering the nature of the call and its relations to the cause
of action, the affidavit does not provide evidence that Marc Rich committed any act
giving rise to the lawsuit. He did not misrepresent the state of the negotiations.
According to Conway, Marc Rich discussed the negotiations with Romak SA and his
desire to establish a grain trading company with an office in the United States. Nor
did he try to lure Conway away from Romak USA. To the contrary, Conway stated
that he “understood from [his] conversation [with Marc Rich] that [he] should stay
at Romak USA.”
Romak USA also argues that the district court had personal jurisdiction over
Marc Rich through the acts of his agents, Gleeson and Novotny. Although a court
may exercise personal jurisdiction over a defendant through the acts of his agent, “[a]
party who relies upon the authority of an agent has the burden of proof regarding both
the fact of the agency relationship and the scope of the agent’s authority.” Karr-Bick
Kitchens & Bath, Inc. v. Gemini Coatings, Inc., 932 S.W.2d 877, 879 (Mo. Ct. App.
1996). We also note that express authority and apparent authority arise from the acts
of the principal, not the alleged agent. United Missouri Bank v. Beard, 877 S.W.2d
237, 240-41 (Mo. Ct. App. 1994). In this case, Romak USA failed to present
evidence that, when Gleeson and Novotny contacted Wilde or Conway, they were
acting in the scope of their authority as personal agents of Marc Rich.
In the district court and on appeal, Romak USA often confuses Marc Rich, the
individual, with Rich & Co. Holding. As Marc Rich points out, in the statement of
facts in his opening brief, Romak USA never refers to Rich & Co. Holding, but only
to Marc Rich. Nor did Romak USA make an effort in the district court to distinguish
Marc Rich, the individual, from Rich & Co. Holding. In support of its opposition to
Marc Rich’s motion to dismiss, Romak USA submitted deposition excerpts from the
dismissed Missouri state court action against Wilde, Conway, and Frick. In one
deposition Romak USA’s counsel, who took all the depositions of record, admitted
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that he was “confused about the names of the Marc Rich entities” and that when he
referred to “‘Marc Rich’ throughout these questions having to do with 1997, [he] was
referring to Marc Rich & Company Holding AG.” In other depositions, counsel was
equally confused. For example, in Gleeson’s deposition, counsel referred to a
document with the “Marc Rich letterhead.” However, the document had the
letterhead of Rich & Co. Holding. Although Romak USA argues that Marc Rich had
given Gleeson authority to hire new employees for Novarco, the document on which
it relies has the letterhead of Rich & Co. Holding.
Although in its reply brief, Romak USA suggests that Marc Rich was the alter
ego of Rich & Co. Holding, at oral argument it conceded that it offered no evidence
in support of an alter ego theory, as it was required to do. See Epps, 327 F.3d at 649;
East Attucks Cmty. Housing v. Old Republic Sur. Co.,114 S.W.3d 311, 321-22 (Mo.
Ct. App. 2003).
Romak USA also argues that the district court abused its discretion in striking
the reports of its expert witness on lost profits in its action against Rich & Co.
Holding. This issue is moot. In the district court, Romak USA represented that it did
“not intend to pursue Defendant Rich & Co. Holding in any future litigation.” In this
court, Romak USA represents that “there will be no retrial of Rich & Co. Holding
regardless of the outcome of this appeal.” Brief for Appellant at 49. “Federal courts
are not empowered ‘to give opinions upon moot questions or abstract propositions,
or to declare principles or rules of law which cannot affect the matter in issue in the
case before it.’” Republican Party of Minnesota v. Klobuchar, No. 03-2801, 2004 WL
1900318, at*3 (8th Cir. Aug. 26, 2004) (quoting Church of Scientology v. United
States, 506 U.S. 9, 12 (1992)). Such is the case here. For the same reason, we do not
review Romak USA’s argument that the district court abused its discretion in
dismissing its claims against Rich & Co. Holding with prejudice, rather than without
prejudice. See Patriot Cinemas, Inc. v. General Cinema Corp., 834 F.2d 208, 215
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(1st Cir. 1987) (“appeal from the dismissal of a count which the plaintiff no longer
wishes to litigate . . . does not present a live controversy” and thus is moot).
Accordingly, we affirm the judgment of the district court.
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