Dairy Farmers of America, Inc. v. Bassett & Walker International, Inc. , 702 F.3d 472 ( 2012 )

United States Court of Appeals
For the Eighth Circuit
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No. 12-1723
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Dairy Farmers of America, Inc.
lllllllllllllllllllll Plaintiff - Appellant
v.
Bassett & Walker International, Inc.
lllllllllllllllllllll Defendant - Appellee
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Appeal from United States District Court
for the Western District of Missouri - St. Joseph
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Submitted: September 20, 2012
Filed: December 26, 2012
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Before MELLOY and BENTON, Circuit Judges, and BAKER, District Judge.1
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BENTON, Circuit Judge.
Dairy Farmers of America, Inc. sued Bassett & Walker International, Inc. for
breach of contract. Bassett moved to dismiss for lack of personal jurisdiction. The
1
The Honorable Kristine G. Baker, United States District Judge for the Eastern
District of Arkansas, sitting by designation.
district court2 dismissed. DFA appeals. Having jurisdiction under 28 U.S.C. § 1291,
this court affirms.
I.
DFA, a Kansas cooperative, has its principal place of business in Kansas City,
Missouri. Bassett, an international commodities broker and a Canadian corporation,
has its principal place of business in Toronto, Ontario. Bassett is not qualified to do
business in Missouri; has no agent for service of process, offices, property, bank
accounts, telephone listings, or employees here; and does not advertise or promote its
business here. According to the record, no Bassett employee has ever entered
Missouri.3
DFA and Bassett began their relationship in 2006. Between July 2009 and
February 2011, Bassett purchased more than 3.5 million pounds of dairy products
from DFA in about 80 transactions totaling $5 million. The parties did not have a
long-term contract, agreeing to each transaction individually by phone. Alejandro
Diaz represented Bassett from Toronto. George Butterfield represented DFA while
traveling and from his home office in Michigan. He did receive approval for each
transaction from DFA’s Missouri headquarters. Butterfield spent three or four days
each month in Missouri. Bassett communicated by phone and email with DFA’s
Missouri headquarters about delivery and billing.
2
The Honorable Fernando J. Gaitan, Jr., Chief Judge, United States District
Court for the Western District of Missouri.
3
According to DFA’s complaint, Bassett conducted meetings with DFA in
Missouri. Bassett disputed this allegation by affidavit; DFA failed to respond with
evidence. “The plaintiff’s showing must be tested, not by the pleadings alone, but by
the affidavits and exhibits presented with the motions and in opposition thereto.”
Wells Dairy, Inc. v. Food Movers Int’l, Inc., 607 F.3d 515, 518 (8th Cir.) (internal
quotation marks omitted), cert. denied, 131 S. Ct. 472 (2010).
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Bassett received a $50,000 line of credit from DFA in 2009. Bassett twice
sought increases in the line of credit: first to $250,000, and then to $400,000. Bassett
sent these requests by email to a DFA employee who processed them in Missouri.
In March 2011, Bassett used the line of credit to buy 220,000 pounds of non-fat
dry milk. Bassett sent email confirmation of the agreement to DFA headquarters in
Missouri. The agreement called for shipment of the product from Colorado to
Mexico; DFA manufactured no products in Missouri. The agreement also called for
Bassett to remit payment to Illinois. DFA sued, claiming Bassett failed to pay. The
district court dismissed the suit for lack of personal jurisdiction.
II.
This court reviews de novo the dismissal for lack of personal jurisdiction.
Viasystems, Inc. v. EBM-Pabst St. Georgen GmbH & Co., KG, 646 F.3d 589, 592
(8th Cir. 2011). “To allege personal jurisdiction, ‘a plaintiff must state sufficient facts
in the complaint to support a reasonable inference that the defendant[] can be
subjected to jurisdiction within the state.’” Wells Dairy, Inc. v. Food Movers Int’l,
Inc., 607 F.3d 515, 518 (8th Cir.) (quoting Dever v. Hentzen Coatings, Inc., 380 F.3d
1070, 1072 (8th Cir. 2004)), cert. denied, 131 S. Ct. 472 (2010). “If the defendant
controverts or denies jurisdiction, the plaintiff bears the burden of proving facts
supporting personal jurisdiction.” Id. Its “showing must be tested, not by the
pleadings alone, but by the affidavits and exhibits presented with the motions and in
opposition thereto.” Id. (internal quotation marks omitted).
“Personal jurisdiction can be specific or general.” Viasystems, 646 F.3d at 593.
DFA agrees that Bassett is not subject to general jurisdiction in Missouri. “Specific
jurisdiction refers to jurisdiction over causes of action arising from or related to a
defendant’s actions within the forum state . . . .” Miller v. Nippon Carbon Co., Ltd.,
528 F.3d 1087, 1091 (8th Cir. 2008) (internal quotation marks omitted). “Specific
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personal jurisdiction can be exercised by a federal court in a diversity suit only if
authorized by the forum state’s long-arm statute and permitted by the Due Process
Clause of the Fourteenth Amendment.” Viasystems, 646 F.3d at 593.
A.
Missouri’s long-arm statute authorizes jurisdiction over any person or firm as
to any cause of action arising from, among other things, that person or firm’s
“transaction of any business within this state” or “making of any contract within this
state.” Mo. Rev. Stat. § 506.500.1(1), (2).
DFA contends that the district court should not have considered whether
Missouri’s long-arm statute limits jurisdiction. According to DFA, “Missouri courts
take jurisdiction to the extent allowed by the due process clause.”4 DFA begins and
ends its inquiry with due process.
DFA misses the mark. While the long-arm statute extends jurisdiction to the
limits of the Due Process Clause, it does so only for acts within its enumerated
categories. The Missouri Supreme Court has held that the legislature intended the
long-arm statute “to provide for jurisdiction, within the specific categories enumerated
in the statutes, to the full extent permitted by the due process clause of the Fourteenth
Amendment.” State ex rel. Metal Serv. Ctr. of Ga., Inc. v. Gaertner, 677 S.W.2d
325, 327 (Mo. banc 1984); see 28 U.S.C. § 1652 (directing this court to follow the
4
Contrary to DFA’s assertion, Bassett did, in the district court, attack the
application of the long-arm statute alone. Assuming that the long-arm-statute inquiry
and the due-process inquiry were the same, Bassett contested personal jurisdiction
under both. The district court corrected both parties’ error of law. As appellee,
Bassett may defend the district court’s judgment on any ground supported in the
record. See Mass. Mut. Life Ins. Co. v. Ludwig, 426 U.S. 479, 480-81 (1976) (per
curiam).
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Missouri Supreme Court’s interpretation of Missouri law). True, courts have often
treated the statutory and constitutional inquiries together. See, e.g., K-V Pharm. Co.
v. J. Uriach & CIA, S.A., 648 F.3d 588, 592 (8th Cir. 2011); Johnson v. Arden, 614
F.3d 785, 794 (8th Cir. 2010) (stating that Missouri’s long-arm statute “confers
jurisdiction to the extent allowed by the Due Process Clause”); Porter v. Berall, 293
F.3d 1073, 1075 (8th Cir. 2002); Conway v. Royalite Plastics, Ltd., 12 S.W.3d 314,
318-19 (Mo. banc 2000). The inquiries, however, are separate. See Bryant v. Smith
Interior Design Grp., Inc., 310 S.W.3d 227, 231-32 (Mo. banc 2010) (analyzing the
statutory and constitutional questions separately); Chromalloy Am. Corp. v. Elyria
Foundry Co., 955 S.W.2d 1, 4 (Mo. banc 1997) (“In order for a non-resident
defendant to subject itself to the long-arm jurisdiction of this state, two elements must
be present. First, the suit must arise out of the activities enumerated in the long arm
statute; second, the defendant must have sufficient minimum contacts with Missouri
to satisfy due process requirements.” (internal citation omitted)); Bennett v. Rapid
Am. Corp, 816 S.W.2d 677, 678 (Mo. banc 1991); State ex rel. Bank of Gering v.
Schoenlaub, 540 S.W.2d 31, 33-34 (Mo. banc 1976); see also Viasystems, 646 F.3d
at 593 n.2 (noting that the Missouri Supreme Court treats the questions separately);
Noble v. Shawnee Gun Shop, Inc., 316 S.W.3d 364, 370 (Mo. App. 2010) (finding
that to interpret the statute to confer jurisdiction in all cases that the constitution would
permit “would effectively ignore the language of the long-arm statute”). This court
will address the inquiries separately.
The district court found that Bassett is not subject to jurisdiction under Section
506.500.1(2) because it made no contract in Missouri. DFA does not dispute that
finding on appeal. Instead, DFA contends that Bassett is subject to jurisdiction under
Section 506.500.1(1) because it transacted business within Missouri.
Missouri courts construe “transaction of any business” broadly. Gaertner, 677
S.W.2d at 327. A person or firm transacts business by visiting Missouri or sending
its product or advertising here. See Chromalloy, 955 S.W.2d at 4 (finding that the
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foreign actor transacted business by “travel[ing] to Missouri intending to contact a
Missouri corporation and propose the purchase of one of its assets”); Gaertner, 677
S.W.2d at 327-28 (finding that the foreign actor “transacted business in Missouri by
shipping materials into this state . . . and retaking them after the work had been
done”); State ex rel. Newport v. Wiesman, 627 S.W.2d 874, 877 (Mo. banc 1982)
(finding that the foreign actor transacted business by establishing two franchised
dealers in Missouri); Mead v. Conn, 845 S.W.2d 109, 112 (Mo. App. 1993) (“Dr.
Henderson did transact business in Missouri by sending the EKG test results to
Missouri for analysis under a business relationship where he paid for said services and
stood to profit from the same.”); Boatman’s First Nat’l Bank of Kansas City v.
Bogina Petroleum Eng’rs, 794 S.W.2d 703, 704 (Mo. App. 1990) (holding that a
single visit by the foreign actor to Missouri was the transaction of business); see also
Precision Const. Co. v. J.A. Slattery Co., 765 F.2d 114, 115-16 (8th Cir. 1985)
(finding jurisdiction under the Missouri statute where the foreign actor solicited orders
from the forum, maintained offices and employees in the forum, and shipped product
to the forum); Simpson v. Dycon Int’l, Inc., 618 S.W.2d 455, 457 (Mo. App. 1981)
(finding jurisdiction where the foreign actor sent advertising into Missouri and sold
equipment to a business in Missouri pursuant to a distributorship agreement); cf.
Schoenlaub, 540 S.W.2d at 33-34 (finding that a foreign bank did not transact
business in Missouri when it “had no contacts with Missouri people or corporations
except in the conduct of normal banking operations,” including paying drafts drawn
on accounts of its customers received from Missouri banks).
On the other hand, the use of mail or telephone communications to Missouri is
not by itself the transaction of business. Johnson Heater Corp. v. Deppe, 86 S.W.3d
114, 120 (Mo. App. 2002); Capitol Indem. Corp v. Citizens Nat’l Bank of Fort Scott,
N.A., 8 S.W.3d 893, 904 (Mo. App. 2000); see Scullin Steel Co. v. Nat’l Ry.
Utilization Corp., 676 F.2d 309, 312 (8th Cir. 1982).
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Bassett did not transact business within Missouri. Bassett sent no product here
and ordered none from Missouri. It did not advertise here. No Bassett employee ever
entered Missouri. Bassett’s communications with DFA’s Missouri headquarters by
phone, email, and fax alone do not amount to the transaction of business. Bassett did
not transact business in Missouri, and therefore is not within the reach of Missouri’s
long-arm statute.
B.
Even if Bassett had transacted business in Missouri, the district court could not
constitutionally exercise jurisdiction over Bassett. “The Due Process Clause of the
Fourteenth Amendment limits the power of a state court to render a valid personal
judgment against a nonresident defendant.” World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 291 (1980). A federal court sitting in diversity may exercise
jurisdiction over a nonresident defendant that has such minimum contacts with the
forum “that the 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 (1945)
(internal quotation marks omitted). “[I]t is essential in each case that there 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.” Hanson v. Denckla, 357 U.S. 235, 253 (1958). The exercise of jurisdiction
satisfies due process when the defendant’s contacts with the forum are such that it
“should reasonably anticipate being haled into court there.” World-Wide
Volkswagen, 444 U.S. at 297. In a contract case, this court evaluates “prior
negotiations and contemplated future consequences, along with the terms of the
contract and the parties’ actual course of dealing” to determine “whether the defendant
purposefully established minimum contacts within the forum.” Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 479 (1985).
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Five factors determine whether sufficient contacts exist to support the exercise
of personal jurisdiction: “(1) the nature and quality of the contacts with the forum
state; (2) the quantity of the contacts; (3) the relationship of the cause of action to the
contacts; (4) the interest of [the forum state] in providing a forum for its residents; and
(5) the convenience or inconvenience to the parties.” K-V Pharm., 648 F.3d at 592.
The first three factors are primary, but all five and the totality of the circumstances
determine whether personal jurisdiction exists. Id. at 592-93.
Two cases, Scullin Steel and Wells Dairy, guide the analysis here. In Scullin
Steel, an officer traveled out of Missouri to negotiate a contract with the buyer, the
National Railway Utilization Corporation (NRUC). Scullin Steel, 676 F.2d at 310.
The original contract called for delivery of the product over a two-year period (later
extended for two more years). Id. Scullin Steel sued NRUC in district court in
Missouri. Id. This court held that due process prevented jurisdiction over NRUC
because it only made payment to Missouri for a product manufactured in Missouri and
delivered to Missouri. Id. at 313-14.
In Wells Dairy, Food Movers International (FMI) bought product from Wells
Dairy. Wells Dairy, 607 F.3d at 517. Wells Dairy sued FMI on 11 invoices in Iowa.
Id. at 517, 519. This court held that FMI had sufficient contacts with the forum state
that personal jurisdiction did not violate due process. Id. at 520. Like NRUC, FMI’s
contract called for payment to the forum for product manufactured in the forum and
delivered to the forum. Id. This court held that “[i]mportant differences, however,
distinguish Scullin Steel from the facts in this case.” Id. In Wells Dairy the
nonresident defendant, FMI, solicited the business, “knowing that Wells Dairy was
an Iowa corporation.” Id. “FMI also sought and applied for credit from the Iowa
company, which was a precursor to their ongoing business relationship.” Id.
DFA emphasizes the nature and quality of Bassett’s contacts with Missouri that
resemble FMI’s contacts with Iowa. Like FMI, Bassett sought and received credit
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from a company in the forum state. FMI solicited Wells Dairy’s business “knowing
that Wells Dairy was an Iowa corporation,” id.; Bassett solicited DFA’s business
knowing that DFA had a Missouri headquarters.
DFA cites its activities at its Missouri headquarters as an additional contact
between Bassett and Missouri. At its headquarters, DFA determines the price and
quantity of products it offers to customers, processes purchase orders, generates
invoices, processes payments, coordinates inventory, and administers the preparation
of shipping documents.
Considered together, however, the nature and quality of Bassett’s contacts with
Missouri do not support jurisdiction under the Due Process Clause. See Aaron Ferer
& Sons Co. v. Atlas Scrap Iron & Metal Co., 558 F.2d 450, 455 (8th Cir. 1977)
(finding that due process prevented jurisdiction where the contracts were not
negotiated or executed in the forum, would not be performed there, the goods involved
neither originated from nor were destined there, and the foreign actor employed no
salesmen or agents there). No “prior negotiations” occurred in Missouri; they took
place between Butterfield in Michigan (or while traveling) and Diaz in Canada.
Sybaritic, Inc. v. Interport Int’l, Inc., 957 F.2d 522, 525 (8th Cir. 1992) (finding that
due process prevented jurisdiction where the foreign actor’s contract with the forum
resident was “negotiated, drafted, presented and executed” out of the forum, even
though the foreign actor visited the forum resident once and communicated with the
forum resident by telephone and mail); Atlas Scrap, 558 F.2d at 455; see Scullin
Steel, 676 F.2d at 310.
Nor do DFA’s headquarters activities support the exercise of jurisdiction. The
contract did not contemplate that DFA would perform coordination and processing in
Missouri. See Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211,
1215 n.4 (8th Cir. 1977) (finding that the due process clause prevented jurisdiction
where “[m]ost of the sales accounting for the large dollar volume involved
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transactions intentionally arranged and consummated apart from [the forum], with
only the invoicing coming from [the forum].”); cf. K-V Pharm., 648 F.3d at 594
(finding sufficient minimum contacts where the contract – amended at a face-to-face
meeting in the forum – contemplated shipment of product and payment to the forum);
St. Jude Med., Inc. v. Lifecare Int’l, Inc., 250 F.3d 587, 591-92 (8th Cir. 2001)
(finding sufficient minimum contacts where the contract contemplated products
manufactured in the forum, payments to the forum, and continuing assistance from the
nonresident defendant to the plaintiff in the forum). See generally Hanson, 357 U.S.
at 253 (“The unilateral activity of those who claim some relationship with a
nonresident defendant cannot satisfy the requirement of contact with the forum
State.”). Bassett contracted to purchase product that was manufactured not in
Missouri, but in Colorado. The contract called for payment not to Missouri, but to
Illinois. The contract called for delivery not to Missouri, but to Mexico. See K-V
Pharm., 648 F.3d at 594 (finding that the contract’s requirement of shipment to the
forum was a contact supporting personal jurisdiction). That DFA administered the
contract in Missouri is “random, fortuitous, or attenuated.” Burger King, 471 U.S.
at 486 (internal quotation marks omitted).
Nor does Bassett’s use of credit support the exercise of jurisdiction. Bassett’s
access to credit differs from FMI’s. FMI contracted to purchase on credit product
manufactured in Iowa for delivery in Iowa and to remit payment to Iowa; the
combination of these contacts alerted FMI that it should reasonably anticipate being
haled into court in Iowa. Wells Dairy, 607 F.3d at 519. Here, nothing in Bassett’s
contract to purchase on credit product manufactured in Colorado for delivery in
Mexico and to remit payment to Illinois alerted Bassett that it should reasonably
anticipate being haled into court on that contract in Missouri.
Nor do Bassett’s communications with DFA in Missouri support the exercise
of jurisdiction. Viasystems, 646 F.3d at 594 (finding that “scattered e-mails, phone
calls, and a wire-transfer of money” to the forum were insufficient contacts to support
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jurisdiction); Inst. Food Marketing Assocs., Ltd. v. Golden State Strawberries, Inc.,
747 F.2d 448, 456 (8th Cir. 1984) (finding that due process prevented jurisdiction
where the contacts between the foreign actor and the forum were limited to phone
conversations and written correspondence); Atlas Scrap, 558 F.2d at 455.
The quantity of Bassett’s contacts are not distinguishable from either NRUC’s
or FMI’s. Litigation in Missouri likely inconveniences Bassett, while litigation
elsewhere likely inconveniences DFA. While Missouri has an interest in providing
a forum for a company with its headquarters here, that does not overcome the
insufficiency of Bassett’s contacts with Missouri.
The Due Process Clause does not permit the exercise of jurisdiction over
Bassett in Missouri on this contract.
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The judgment of the district court is affirmed.
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