Freestream Aircraft (Bermuda) v. Aero Law Group

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FREESTREAM AIRCRAFT (BERMUDA) No. 16-17347
LIMITED; ALIREZA ITTIHADIEH,
Plaintiffs-Appellants, D.C. No.
2:16-cv-01236-
v. JCM-NJK
AERO LAW GROUP; JOHN SCHMIDT,
Defendants-Appellees. OPINION
Appeal from the United States District Court
for the District of Nevada
James C. Mahan, Senior District Judge, Presiding
Argued and Submitted April 12, 2018
San Francisco, California
Filed September 18, 2018
Before: Kim McLane Wardlaw and Jacqueline H. Nguyen,
Circuit Judges, and Solomon Oliver, Jr., * District Judge.
Opinion by Judge Nguyen
*
The Honorable Solomon Oliver, Jr., United States District Judge
for the Northern District of Ohio, sitting by designation.
2 FREESTREAM AIRCRAFT V. AERO LAW GROUP
SUMMARY **
Personal Jurisdiction
The panel reversed the district court’s dismissal for lack
of personal jurisdiction of a complaint in which plaintiffs
alleged that John Schmidt made defamatory statements
about Freestream Aircraft (Bermuda) Limited at an aviation
industry conference in Nevada.
Freestream is a Bermudan full-service aircraft company
that was founded by Alireza Ittihadieh, a citizen of the
United Kingdom who currently resides in Switzerland. John
Schmidt, a Washington resident, is an attorney at Aero Law
Group, a Washington professional corporation that provides
transactional legal services to airlines and aircraft owners
and operators worldwide, and regularly solicits business in
Nevada, including participating in industry meetings and
conventions in the state. Plaintiffs Freestream and Ittihadieh
sued defendants Schmidt and Aero in the United States
District Court for the District of Nevada.
The panel held that Nevada’s exercise of personal
jurisdiction over defendants comported with constitutional
due process because all three prongs of the minimum
contacts test for specific jurisdiction were satisfied.
The panel held that the district court erred in relying on
the “effects test” of Calder v. Jones, 465 U.S. 783 (1984),
because the inquiry under that test focused on conduct that
took place outside the forum state and that had effects inside
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
FREESTREAM AIRCRAFT V. AERO LAW GROUP 3
the forum state. The panel further held that the rule in
Paccar Int’l, Inc. v. Commercial Bank of Kuwait, S.A.K.,
757 F.2d 1058 (9th Cir. 1984), not Calder, was the proper
starting place where, as here, an intentional tort was
committed within the forum state.
The panel held that because plaintiffs alleged that
defendants committed the intentional tort of defamation
while present in the forum state, the first two prongs of the
minimum contacts were satisfied.
The third prong of the minimum contacts test for specific
jurisdiction provides that the exercise of jurisdiction must
comport with fair play and substantial justice, i.e., it must be
reasonable. Under Paccar, to evaluate reasonableness, the
court uses a seven-factor balancing test. The panel held that
the balancing test weighed in plaintiffs’ favor, or, at best was
a wash. The panel concluded that defendants failed to make
a compelling case that the district court’s exercise of
personal jurisdiction over them would be unreasonable,
particularly in light of Nevada’s strong interest in
adjudicating matters involving intentional torts committed
within the State.
COUNSEL
Marc Ayala (argued), Boies Schiller Flexner LLP, Armonk,
New York; Douglas A. Mitchell, Boies Schiller Flexner
LLP, Las Vegas, Nevada; for Plaintiffs-Appellants.
Angela T. Nakamura Ochoa (argued) and Joseph P. Garin,
Lipson Neilson Cole Seltzer & Garin P.C., Las Vegas,
Nevada, for Defendants-Appellees.
4 FREESTREAM AIRCRAFT V. AERO LAW GROUP
OPINION
NGUYEN, Circuit Judge:
A defendant who travels to Nevada and commits an
intentional tort there can be sued in that state, absent
circumstances that would make such a suit unreasonable.
The outcome appears obvious, but we have admittedly
created some confusion as to the proper analytical approach
to specific jurisdiction in our circuit. Today we take the
opportunity to clarify our case law.
Plaintiffs Freestream Aircraft (Bermuda) Limited
(“Freestream”) and Alireza Ittihadieh sued Defendants John
Schmidt and Aero Law Group (“Aero”) in the United States
District Court for the District of Nevada, alleging that
Schmidt made defamatory statements about Freestream at an
aviation industry conference in Nevada. The district court
granted Defendants’ motion to dismiss for lack of personal
jurisdiction.
We have jurisdiction pursuant to 28 U.S.C. § 1291 and
reverse.
FACTUAL BACKGROUND
Freestream is a Bermudan full-service aircraft company
in the business jet market. It participates in all aspects of
aircraft transactions: brokerage, acquisition, marketing,
sales, custom design services, import/export, and
maintenance review. Freestream was founded in 1992 by
Plaintiff Alireza Ittihadieh, a citizen of the United Kingdom
who currently resides in Switzerland.
John Schmidt, a Washington resident, is an attorney at
Aero. Aero is a Washington professional corporation that
FREESTREAM AIRCRAFT V. AERO LAW GROUP 5
provides transactional legal services to airlines and aircraft
owners and operators worldwide. Aero allegedly regularly
solicits business in Nevada, including by participating in
industry meetings and conventions in the state.
Aero belongs to several trade groups, including the
National Business Aviation Association (“NBAA”), and
attends trade seminars and conferences around the world.
The NBAA holds its annual conferences in various
locations, and, in 2015, held a conference in Las Vegas,
Nevada.
Freestream alleges that Schmidt has been attacking its
reputation by falsely stating that a transaction structure used
by Freestream—a “back-to-back” transaction 1—is illegal
and unethical and that Freestream only uses this type of
transaction.
In 2014, Schmidt allegedly interfered with Freestream’s
imminent sale of a Boeing Business Jet to a company named
Blue City Holdings LLC by telling its representatives that
Freestream was built entirely on illegal and unethical back-
to-back transactions and urging them to discontinue all
business with Freestream and Ittihadieh. After the
transaction fell through, Freestream’s counsel wrote to Aero
demanding that Schmidt and his colleagues stop defaming
Freestream. Aero’s founder responded that, to his
1
In a back-to-back transaction, the broker acts as both an interim
buyer and interim seller of an aircraft. In other words, the broker, who
is aware of a potential seller and buyer, buys the aircraft from the seller
and then sells it to the buyer. The broker’s compensation is the
difference between the purchase price from the original seller and the
sale price to the end buyer. This is in contrast to a direct-sale transaction,
in which a broker connects a buyer and seller and then takes a
commission on the direct sale between the two.
6 FREESTREAM AIRCRAFT V. AERO LAW GROUP
knowledge, nobody at Aero had ever stated or implied that
Freestream’s business was built entirely on back-to-back
transactions.
On June 25, 2015, at an aviation conference on the Isle
of Man, Schmidt met with Masha Shvetsova, whom Schmidt
understood to be an agent for potential buyers of a Boeing
Business Jet. When Shvetsova told Schmidt that she was
leaning towards using Freestream as a broker, Schmidt told
her that she was “going to be led” to a back-to-back
transaction. Shvetsova asked about the legality of back-to-
back transactions. Schmidt responded, “It’s quite possibly
illegal,” adding that back-to-back transactions were “ripe”
for criminal prosecution, “but it has not happened yet.”
When Shvetsova asked why brokers use the back-to-back
transaction if it is illegal or arguably illegal, Schmidt said,
“[I]t’s extremely lucrative.”
Several months later, on November 18, 2015, Schmidt
again met with Shvetsova at the NBAA Annual Meeting and
Convention in Las Vegas, Nevada. This time, they were
joined by Marwan Khalek, CEO of Gama Aviation, a global
business aviation services company. During this
conversation, Schmidt reiterated that back-to-back
transactions are illegal under federal law and violate the
ethical rules of the Washington State Bar. Schmidt said that
Freestream would try to structure the sale to Shvetsova’s
buyer as a back-to-back transaction, and the buyer would be
“significantly disadvantaged by that.” When Shvetsova
reminded Schmidt that he had previously called back-to-
back transactions “illegal, essentially,” Schmidt agreed. He
said that a broker in these transactions is not “a real, bona
fide seller” and called the transactions “completely
unethical.”
FREESTREAM AIRCRAFT V. AERO LAW GROUP 7
PROCEDURAL HISTORY
Plaintiffs filed this action in the United States District
Court for the District of Nevada, seeking compensation for
defamation and injunctive relief against further defamatory
statements. Plaintiffs allege that Schmidt’s statements at the
NBAA meeting were false and defamatory because
Freestream does not engage only in back-to-back
transactions and those transactions are not illegal. Plaintiffs
allege that the defamatory statements harmed their business
because reputation is critically important in the private
aviation industry, which enjoys a particularly tight-knit
market.
Defendants filed a motion to dismiss for lack of personal
jurisdiction or, in the alternative, to change venue to the
Western District of Washington. The district court granted
Defendants’ motion to dismiss for lack of personal
jurisdiction without addressing whether venue transfer
would be appropriate. This appeal timely followed.
STANDARD OF REVIEW
We review de novo the district court’s dismissal for lack
of personal jurisdiction. Wash. Shoe Co. v. A-Z Sporting
Goods Inc., 704 F.3d 668, 671 (9th Cir. 2012). The factual
findings underlying the district court’s jurisdiction
determination are reviewed for clear error. Panavision, Int’l,
L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998). To
avoid dismissal, the plaintiff bears the burden of
demonstrating that its allegations establish a prima facie
showing of personal jurisdiction. Boschetto v. Hansing,
539 F.3d 1011, 1015 (9th Cir. 2008). Uncontroverted
allegations in the complaint must be taken as true, and
factual disputes are construed in the plaintiff’s favor. Rio
8 FREESTREAM AIRCRAFT V. AERO LAW GROUP
Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1019 (9th
Cir. 2002).
DISCUSSION
When no federal statute governs personal jurisdiction,
the district court applies the law of the forum state.
Boschetto, 539 F.3d at 1015. Nevada’s jurisdiction reaches
the limits of due process set by the United States
Constitution. Nev. Rev. Stat. § 14.065. Constitutional due
process requires that a defendant “have certain minimum
contacts” with the forum state “such 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).
There are two categories of personal jurisdiction:
(1) general jurisdiction and (2) specific jurisdiction. See
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S.
408, 413–15 (1984). Plaintiffs concede that the allegations
in the complaint do not support the exercise of general
jurisdiction, 2 and so we address only specific jurisdiction
here.
As to specific jurisdiction, we generally conduct a three-
part inquiry—commonly referred to as the minimum
contacts test—to determine whether a defendant has
sufficient contacts with the forum to warrant the court’s
exercise of jurisdiction:
2
General jurisdiction exists when the defendant’s contacts with the
forum state are so “continuous and systematic” as to render the defendant
essentially “at home” in that forum. See Daimler AG v. Bauman, 134 S.
Ct. 746, 761 (2014).
FREESTREAM AIRCRAFT V. AERO LAW GROUP 9
(1) The non-resident defendant must
purposefully direct his activities or
consummate some transaction with the
forum or resident thereof; or perform
some act by which he purposefully avails
himself of the privilege of conducting
activities in the forum, thereby invoking
the benefits and protections of its laws;
(2) the claim must be one which arises out of
or relates to the defendant’s forum-
related activities; and
(3) the exercise of jurisdiction must comport
with fair play and substantial justice, i.e.,
it must be reasonable.
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797,
802 (9th Cir. 2004). The minimum contacts test “ensures
that a defendant will not be haled into a jurisdiction solely as
a result of random, fortuitous, or attenuated contacts[.]”
Burger King Corp. v. Redzewicz, 471 U.S. 462, 475 (1985)
(internal quotation marks omitted).
Under the minimum contacts test and the applicable
authority, we conclude that there was specific jurisdiction in
Nevada in this case.
I.
A.
Generally, “[t]he commission of an intentional tort in a
state is a purposeful act that will satisfy the first two
requirements [of the minimum contacts test].” Paccar Int’l,
Inc. v. Commercial Bank of Kuwait, S.A.K., 757 F.2d 1058,
10 FREESTREAM AIRCRAFT V. AERO LAW GROUP
1064 (9th Cir. 1985); see also Ballard v. Savage, 65 F.3d
1495, 1498 (9th Cir. 1995) (“[T]he ‘purposeful availment’
requirement is satisfied if the defendant has taken deliberate
action within the forum state . . . .”). We applied that rule in
Paccar and held that a non-Californian defendant could be
sued in California for an allegedly fraudulent demand for
payment made to a California entity. 757 F.2d at 1064. We
found that “[t]he inducement of reliance in California [was]
a sufficient act within California to satisfy the requirement
of minimum contacts where the cause of action [arose] out
of that inducement.” Id. (first alteration in original) (quoting
Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280,
1288 (9th Cir. 1977)).
The same is true here: Schmidt’s allegedly defamatory
statement was made in Nevada, and the cause of action arises
from that statement. Because Plaintiffs allege that
Defendants committed the intentional tort of defamation
while present in the forum state, the first two prongs of the
minimum contacts test are satisfied here. See Paccar,
757 F.2d at 1064.
B.
Rather than look to the location of allegedly intentional
tortious conduct, the district court’s minimum contacts
analysis centered on what has become known as the “effects
doctrine” or “effects test” of Calder v. Jones, 465 U.S. 783(1984). 3 The district court’s reliance on the Calder effects
3
Under the Calder effects test, purposeful direction exists when a
defendant allegedly: “(1) committed an intentional act, (2) expressly
aimed at the forum state, (3) causing harm that the defendant knows is
likely to be suffered in the forum state.” Schwarzenegger v. Fred Martin
Motor Co., 374 F.3d 797, 803 (9th Cir. 2004) (quoting Dole Food Co. v.
Watts, 303 F.3d 1104, 1111 (9th Cir. 2002)).
FREESTREAM AIRCRAFT V. AERO LAW GROUP 11
test was misplaced, however, because the inquiry under that
test focuses on conduct that takes place outside the forum
state and that has effects inside the forum state. Because
some of our past opinions have suggested that Calder is also
the starting place for conduct that takes place inside the
forum state, we take this opportunity to clarify our case law.
A review of the development of our jurisprudence in this
area is helpful. In Data Disc, Inc., we reaffirmed the
minimum contacts test for evaluating the “nature and quality
of the defendant’s contacts in relation to the cause of action,”
and held that “[t]he inducement of reliance [within the forum
state] is a sufficient act . . . to satisfy the requirement of
minimum contacts where the cause of action arises out of
that inducement.” 557 F.2d at 1287–88. At that time, the
first prong of our minimum contacts test referred only to
purposeful availment and made no mention of purposeful
direction. See id. at 1287.
Then, in Calder v. Jones, the Supreme Court established
the effects test, whereby a defendant can be subject to
personal jurisdiction based on “intentional conduct [outside
the forum] calculated to cause injury to [a plaintiff] in [the
forum].” 465 U.S. at 791. We first cited Calder for that
proposition in Gilbert v. DaGrossa, in which the plaintiff
filed suit in Washington, but alleged that the defendants
worked in New York and New Jersey and that the allegedly
tortious acts occurred in those two states. 756 F.2d 1455,
1459 (9th Cir. 1985). After noting that there was “neither an
allegation nor evidence that the [defendants] ever transacted
any business, or committed any tortious act or acts, within
the state of Washington,” we “recognize[d] that the ‘effects’
doctrine may also serve as a basis for a finding of in
personam jurisdiction.” Id. at 1459 & n.4. Ultimately,
because there was no evidence that the alleged activities had
12 FREESTREAM AIRCRAFT V. AERO LAW GROUP
an effect in Washington, we held that the effects test was not
satisfied. Id. at 1459 n.4.
What was implicit in Gilbert—that an allegation of
tortious activity within the forum state would likely have
supported the exercise of personal jurisdiction—was
decided in Paccar. Paccar, 757 F.2d at 1064 (“The
commission of an intentional tort in a state is a purposeful
act that will satisfy the first two requirements [of the
minimum contacts test].”). 4
Over the next few years, we reaffirmed (1) “that the
‘purposeful availment’ requirement is satisfied if the
defendant has taken deliberate action within the forum
state,” Ballard, 65 F.3d at 1498, and (2) that Calder extended
the reach of personal jurisdiction to a defendant who never
physically entered the forum state. See Haisten v. Grass
Valley Med. Reimbursement Fund, Ltd., 784 F.2d 1392,
1397 (9th Cir. 1986) (“[W]ithin the rubric of ‘purposeful
availment’ the [Supreme] Court has allowed the exercise of
jurisdiction over a defendant whose only ‘contact’ with the
forum state is the ‘purposeful direction’ of a foreign act
having effect in the forum state.”).
In Schwarzenegger v. Fred Martin Motor Co., we again
described the purposeful direction test as applying to out-of-
forum conduct. 374 F.3d at 802. We explained that “[a]
showing that a defendant purposefully availed himself of the
privilege of doing business in a forum state typically consists
of evidence of the defendant’s actions in the forum, such as
4
Paccar also suggested that “[a] tortious act, standing alone, can
satisfy all three requirements [of the minimum contacts test] if the act is
aimed at a resident of the state or has effects in the state.” 757 F.2d at1064 (citing Calder, 465 U.S. at 788–89).
FREESTREAM AIRCRAFT V. AERO LAW GROUP 13
executing or performing a contract there.” Id. (emphasis
added). By contrast, “[a] showing that a defendant
purposefully directed his conduct toward a forum state . . .
usually consists of evidence of the defendant’s actions
outside the forum state that are directed at the forum, such as
the distribution in the forum state of goods originating
elsewhere.” Id. at 803 (emphasis added). We also noted that
a purposeful availment analysis is “most often used in suits
sounding in contract,” whereas a purposeful direction
analysis is “most often used in suits sounding in tort.” Id. at
802.
Read together, those statements comparing within-
forum-state versus out-of-forum-state conduct, and contract
versus tort actions, suggest that a purposeful direction
analysis naturally applies in suits sounding in tort where the
tort was committed outside the forum state. See C. Douglas
Floyd and Shima Baradaran-Robison, Toward a Unified Test
of Personal Jurisdiction in an Era of Widely Diffused
Wrongs: The Relevance of Purpose and Effects, 81 Ind. L.J.
601, 624 (2006) (“In Schwarzenegger v. Fred Martin Motor
Co., the Ninth Circuit distinguished between ‘purposeful
availment,’ applicable in contract and other cases involving
the conduct of business within a state, and ‘purposeful
direction,’ applicable in tort cases involving extraterritorial
conduct, equating the purposeful direction (but not the
purposeful availment) standard with the Calder effects test.”
(emphasis added)). Nonetheless, the district court here
relied on our observation that a purposeful direction analysis
is “most often used in suits sounding in tort,”
Schwarzenegger, 374 F.3d at 802, and applied the Calder
effects test on that basis.
Although rigidly applying the Calder effects test without
taking into account where the allegedly tortious conduct
14 FREESTREAM AIRCRAFT V. AERO LAW GROUP
occurred conflicts with our approach in Paccar, we may
have unwittingly contributed to the district court’s error by
suggesting otherwise in a couple of our subsequent opinions.
In Yahoo! Inc. v. La Ligue Contre Le Racisme Et
L’Antisemitisme, we stated, “In tort cases, we typically
inquire whether a defendant ‘purposefully direct[s] his
activities’ at the forum state, applying an ‘effects’ test that
focuses on the forum in which the defendant’s actions were
felt, whether or not the actions themselves occurred within
the forum.” 433 F.3d 1199, 1206 (9th Cir. 2006) (en banc)
(citing Schwarzenegger, 374 F.3d at 803). We then
analyzed, under the effects test, the defendants’ act of
intentionally filing suit in France, which resulted in a French
court’s orders directing the plaintiff to take actions in the
forum state. Id. at 1209. Notably, we did not apply the
effects test to the defendants’ contacts that occurred within
the forum—the sending of a cease and desist letter to, and
service of process on, Yahoo!. Id. at 1206, 1209. Similarly,
in Mavrix Photo, Inc. v. Brand Technologies, Inc., we
suggested that an effects test would apply “whether or not
the actions themselves occurred within the forum,” but,
again, we did so in the context of assessing out-of-forum-
state conduct. 647 F.3d 1218, 1228–29 (9th Cir. 2011)
(applying effects test to company’s out-of-forum posting of
allegedly infringing photos on website aimed at forum state).
Importantly, unlike the case at hand, neither Yahoo! nor
Mavrix involved an alleged tort committed while the
defendant was physically present in the forum state.
This review of the history of the effects doctrine and its
place in our jurisprudence makes clear that Paccar, not
Calder, is the proper starting place where an intentional tort
is committed within the forum state. Paccar was rooted in
the well-settled understanding that the commission of a tort
within the forum state usually supports the exercise of
FREESTREAM AIRCRAFT V. AERO LAW GROUP 15
personal jurisdiction. See Judge Beverly Reid O’Connell
and Judge Karen L. Stevenson, Federal Civil Procedure
Before Trial ¶ 3:161–162 (Rutter Group Nat. Ed. 2017) (“If
the nonresident committed the liability-producing acts while
physically present in the forum state, this is almost always
held a sufficient ‘contact’ to support personal jurisdiction in
lawsuits arising from those acts. . . . This principle is most
frequently encountered in cases involving torts committed
by nonresidents while temporarily in the state.”); see also
Elkhart Eng’g Corp. v. Dornier Werke, 343 F.2d 861, 868
(5th Cir. 1965) (“When a non-resident has voluntarily
entered a state and invoked the protections of [its] laws, it
does not in our view offend ‘traditional notions of fair play
and substantial justice’ to require the non-resident to answer
in the courts of that state for any tortious acts committed
while there.”); Kilpatrick v. Texas & P.R. Co., 166 F.2d 788,
791 (2d Cir. 1948) (“It is settled that, given the proper
procedural support for doing so, a state may give judgment
in personam against a non-resident, who has only passed
through its territory, if the judgment be upon a liability
incurred while he was within its borders.”).
The effects doctrine, on the other hand, makes more
sense when dealing with out-of-forum tortfeasors. See
Martensen v. Koch, 942 F. Supp. 2d 983, 994 (N.D. Cal.
2013) (“[T]he ‘effects’ test appears unnecessary where, as
here, part of the alleged tort occurred in [the forum].”); see
also Nelson v. Millennium Labs., Inc., No. 2:12-CV-01301-
SLG, 2012 WL 12826476, at *3 (D. Ariz. Oct. 2, 2012)
(relying on Paccar to find the first prong of the minimum
contacts test satisfied where the defendant committed an
intentional tort within the forum state).
16 FREESTREAM AIRCRAFT V. AERO LAW GROUP
C.
Defendants urge us to follow our recent opinion in
Morrill v. Scott Financial Corp., 873 F.3d 1136 (9th Cir.
2017), instead of Paccar. In Morrill, the plaintiffs, residents
of Arizona, filed suit in Arizona and alleged that the
defendants engaged in conduct aimed at the forum state
because the defendants filed suit against the plaintiffs for
defamation in Nevada and then served process, sought
subpoenas, and engaged in other allegedly abusive litigation-
related tactics in Arizona. Id. at 1142–43. We found that
because the defendants had not expressly aimed their
conduct at Arizona, personal jurisdiction was lacking. Id. at
1142–49.
At first blush Morrill appears to conflict with Paccar,
since some of the conduct did occur in Arizona. But the
allegedly tortious conduct in Morrill was materially different
from that in Paccar and here. Namely, it was the litigation—
and only the litigation—that brought the Morrill defendants
to Arizona. We explained:
Defendants’ conduct in Arizona occurred as
part of the required process for pursuing
discovery and serving Plaintiffs in
connection with the litigation in Nevada. The
outcome would be different if, as suggested
by the hypothetical presented by the dissent,
an attorney had traveled to Arizona, not to
appear at a hearing on a motion to quash a
subpoena, but to throw a rock through the
window of the Arizona residence of opposing
counsel in litigation that was pending in
Nevada. The reason for such inappropriate
conduct could have been the animosity
between counsel that resulted from their
FREESTREAM AIRCRAFT V. AERO LAW GROUP 17
interaction during the litigation in Nevada.
However, the throwing of the rock would not
have been required, or in any manner
justified, by the litigation process there.
Id. at 1148. Because the Nevada litigation required the
defendants to conduct activity in Arizona (where the
plaintiffs happened to reside), and the defendants thus were
not in the forum state of their own volition, they had not
availed themselves of the forum under the minimum contacts
test. See id. at 1146–47 (“[P]hysical entry that is merely
incidental to an out-of-state transaction does not satisfy the
constitutional minimum contacts requirement.”). By
contrast, in the instant case, Schmidt voluntarily traveled to
Nevada to attend the aviation industry conference, and
voluntarily agreed to speak with Shvetsova and Khalek
there. In other words, Schmidt threw Morill’s hypothetical
rock.
We therefore reject Defendants’ invitation to find that
Morill, rather than Paccar, applies to the circumstances
here.
II.
Having found that Plaintiffs satisfied the first two prongs
of the minimum contacts test under Paccar, we now turn to
the third prong. Defendants have the burden of presenting a
“compelling case that the presence of some other
considerations would render jurisdiction [in Nevada]
unreasonable.” Harris Rutsky & Co. Ins. Servs., Inc. v. Bell
& Clements Ltd., 328 F.3d 1122, 1132 (9th Cir. 2003)
(quoting Burger King, 471 U.S. at 477); see also
Schwarzenegger, 374 F.3d at 802. To evaluate
reasonableness, we use a seven-factor balancing test that
weighs: (1) the extent of the defendant’s purposeful
18 FREESTREAM AIRCRAFT V. AERO LAW GROUP
interjection into the forum state’s affairs; (2) the burden on
the defendant of defending in the forum; (3) the extent of
conflict with the sovereignty of the defendant’s state; (4) the
forum state’s interest in adjudicating the dispute; (5) the
most efficient judicial resolution of the controversy; (6) the
importance of the forum to the plaintiff’s interest in
convenient and effective relief; and (7) the existence of an
alternative forum. Paccar, 757 F.2d at 1064–65.
(1) Extent of the purposeful interjection into the forum
state
Defendants assert that they are residents of Washington
who did not interject themselves into any of Nevada’s
affairs. They contend that there are no allegations in the
complaint to support an inference that Schmidt went to
Nevada specifically to commit intentional torts against
Plaintiffs or to solicit clients. Defendants sum up their
argument as such: “Attending a conference, and republishing
an allegedly defamatory statement first published in another
state, should not be a basis for personal jurisdiction.”
But Defendants’ contacts with Nevada are not so
attenuated. Plaintiffs allege that Schmidt intentionally
traveled to Nevada to participate in the 2015 convention on
behalf of Aero. Aero also regularly solicits business in
Nevada for its law practice, including through participation
in industry meetings and conventions there. Accordingly,
this factor weighs in favor of the exercise of personal
jurisdiction over Defendants in Nevada.
(2) Burden on defendant of defending in the forum
Defendants contend that they would suffer a financial
hardship and be unduly burdened by having to travel to
Nevada to attend depositions and court appearances.
FREESTREAM AIRCRAFT V. AERO LAW GROUP 19
Relatedly, they argue that, as attorneys, they would want to
be “heavily involved in the defense of their case,” and this
would require them to become acquainted with Nevada law
and procedures.
This factor cuts in favor of Defendants, but barely. True,
Defendants would be burdened by having to travel to
Nevada. But Defendants have not presented evidence that
the “inconvenience is so great as to constitute a deprivation
of due process.” Panavision, 141 F.3d at 1323 (quoting
Caruth v. Int’l Psychoanalytical Ass’n, 59 F.3d 126, 128–29
(9th Cir. 1995)). As Plaintiffs point out, Defendants
regularly do business around the country, including in
Nevada, and we have previously noted that “modern
advances in communications and transportation have
significantly reduced the burden of litigating in another
[forum].” See Sinatra v. Nat’l Enquirer, Inc., 854 F.2d 1191,
1199 (9th Cir. 1988). Moreover, it is not at all clear that
learning the law and procedure of another state would
unduly burden Defendants, who operate a global law
practice and provide services to clients “worldwide.”
(3) Extent of conflict with the sovereignty of defendant’s
state
Defendants assert that Schmidt qualified his statements
to Shvetsova and Khalek as being based on Washington law,
and “[a]s the case revolves around communications made to
clients and potential clients, the law on disclosure of
attorney-client privileged documents in Washington may
differ from the state law established in Nevada.” Plaintiffs
respond that there should be no concern about a potential
conflict of laws regarding attorney-client privilege because
there was no legal representation involved. Indeed,
Defendants seemed to take this very position in their
answering brief where they stated, “Plaintiffs do not contend
20 FREESTREAM AIRCRAFT V. AERO LAW GROUP
that legal representation was solidified” between Aero and
Shvetsova and Khalek. This factor weighs in favor of
Plaintiffs.
(4) Forum state’s interest in adjudicating the dispute
Defendants argue that Nevada has no interest in
disciplining Washington attorneys for their alleged
misconduct involving foreign citizens. Defendants also
contend that the aviation industry has ties to Washington, so
Washington has a greater interest in the underlying subject
matter of the case.
Plaintiffs argue that this is not a legal malpractice claim,
but a tort case, so the Washington State Bar’s interest in
disciplining its attorneys is irrelevant. Plaintiffs also
contend that Nevada has a strong interest in adjudicating
cases involving intentional torts committed within the state.
Defendants may be right that Nevada generally does not
have a significant interest in “policing utterances and
comments made by travelers in the state.” But although
Nevada’s interest in this case may have been stronger if
Plaintiffs were Nevada residents, Nevada does have an
interest in torts allegedly committed within its borders
(namely, preventing them). See Data Disc, 557 F.2d at 1288(“A state has a special interest in exercising jurisdiction over
those who have committed tortious acts within the state.”).
Washington’s interest in the matter, as home to Defendants
and a Boeing distribution center, 5 is outweighed by
5
The parties dispute whether Boeing Business Jet’s headquarters is
in Washington.
FREESTREAM AIRCRAFT V. AERO LAW GROUP 21
Nevada’s interest. Therefore, this factor weighs in favor of
finding personal jurisdiction over Defendants in Nevada.
(5) Most efficient judicial resolution of the controversy
Defendants contend that Schmidt made his statements
about the legality of back-to-back transactions based on his
understanding of Washington law, so it would be more
efficient for matters concerning Washington law to be
resolved in Washington. Defendants’ argument misses the
mark. This factor depends “primarily [on] where the
witnesses and the evidence are likely to be located.” Menken
v. Emm, 503 F.3d 1050, 1061 (9th Cir. 2007). Here, the
witnesses reside in several different fora (including foreign
nations). And this factor is “no longer weighed heavily
given the modern advances in communication and
transportation.” Harris Rutsky, 328 F.3d at 1133 (quoting
Panavision, 141 F.3d at 1323).
This factor may weigh slightly in favor of Defendants,
given that the burden for the foreign plaintiffs and witnesses
to travel to Washington (as opposed to Nevada) is minimal,
but it is more likely neutral since it is also reasonably
efficient to convene at the place of the wrongful conduct—
Nevada.
(6) Importance of the forum to plaintiff’s interest in
convenient and effective relief
Defendants argue that Nevada is not a convenient
location for any of the parties, and they stress that Plaintiffs
have demonstrated no personal connection to Nevada. In
response, Plaintiffs note the significant time and resources
invested in the litigation in Nevada thus far and the great
inconvenience should they have to refile elsewhere.
Plaintiffs also point out that their counsel is located in
22 FREESTREAM AIRCRAFT V. AERO LAW GROUP
Nevada. This factor weighs slightly in favor of Plaintiffs,
but we generally do not give it much weight. See Dole Food
Co., 303 F.3d at 1116.
(7) Existence of an alternative forum
Defendants contend that there are alternative fora
because, “[a]ccording to the complaint, Aero allegedly made
defamatory statements or interrupted Plaintiffs’ business in
two other instances in different locations.” This argument
directly undermines Defendants’ main argument that
allegedly making defamatory statements in a particular
forum is not sufficient to confer jurisdiction in that forum.
Defendants also renew their argument that Washington
is the better forum. Plaintiffs bear the burden of proving the
unavailability of an alternative forum, see Core-Vent Corp.
v. Nobel Indus. AB, 11 F.3d 1482, 1490 (9th Cir. 1993), but
Plaintiffs agree that Washington would have personal
jurisdiction over Defendants because Aero and Schmidt are
domiciled there. Therefore, this factor weighs in favor of
Defendants. See Harris Rutsky, 328 F.3d at 1134.
***
The seven-factor balancing test weighs in Plaintiffs’
favor, or, at best, is “a wash.” Id. Therefore, Defendants
have failed to make a compelling case that the district court’s
exercise of personal jurisdiction over them would be
unreasonable, particularly in light of Nevada’s strong
interest in adjudicating matters involving intentional torts
committed within the State.
FREESTREAM AIRCRAFT V. AERO LAW GROUP 23
CONCLUSION
Because all three prongs of the minimum contacts test
for specific jurisdiction are satisfied, we hold that Nevada’s
exercise of personal jurisdiction over Defendants comports
with constitutional due process. 6 Accordingly, we reverse
the district court’s dismissal of the complaint.
REVERSED AND REMANDED.
6
Having determined that there is personal jurisdiction over
Defendants in Nevada, we need not reach the question of whether the
district court erred in refusing to transfer the case to a different venue in
lieu of dismissal.