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noting that it "is not a contest between the parties as to which one presents a longer list of witnesses located in the potential districts"
Summary of this case from Public Utility Service Corp. v. Leggett Platt, Inc.Opinion
Civ. No. 02-1376 (JEL/JGL)
February 14, 2003
Timothy E. Branson, Esq., Dorsey Whitney LLP, for Plaintiff HighJump Software, Inc.
Bradley S. Keller, Esq., Byrnes Keller LLP, for Defendant SCS Refrigerated Services, LLC.
ORDER
HighJump Software, Inc. (HighJump) brought this action against SCS Refrigerated Services, LLC (SCS) for breach of contract based on SCS's alleged failure to make installment payments for a computer system. The action was removed from Minnesota state court and is now before the Court on SCS's motion to dismiss for lack of personal jurisdiction or, in the alternative, to transfer the action to the United States District Court for the Western District of Washington. For the reasons set forth below, the Court denies SCS's motion.
I. SUBJECT MATTER JURISDICTION
The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332(a)(1), 1441(a) (2000).
II. BACKGROUND
SCS is a Washington corporation whose corporate offices are located in Algona, Washington. SCS operates three cold storage warehouses in the Seattle-Tacoma area. HighJump is a Minnesota corporation whose headquarters are located in Eden Prairie, Minnesota. In December 1998, HighJump and SCS executed a contract pursuant to which HighJump agreed to update SCS's information technology system. In 1999, HighJump customized, tested, and installed the system.
In April 2000, SCS and HighJump amended the contract to provide for a four-year software lease and a two-year support commitment. SCS made 17 payments to HighJump, but has not made a payment since January 2002.
III. DISCUSSION A. Personal Jurisdiction
To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff must establish a prima facie case that the forum state has personal jurisdiction over the defendant. Stevens v. Redwing, 146 F.3d 538, 543 (8th Cir. 1998); Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir. 1994). To decide whether the plaintiff has made the requisite showing, a court must view the evidence in the light most favorable to the plaintiff. Digi-Tel Holdings, Inc. v. Proteq Telecomms., Ltd., 89 F.3d 519, 522 (8th Cir. 1996); Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991). The court must determine whether the exercise of personal jurisdiction over the defendant complies with the state long-arm statute and, if so, whether it comports with due process. Stevens, 146 F.3d at 543; Moog World Trade Corp. v. Bancomer, S.A., 90 F.3d 1382, 1384 (8th Cir. 1996). Minnesota's long-arm statute, Minn. Stat. § 543.19 (2002), extends jurisdiction over defendants to the extent allowed by due process. Soo Line R.R. v. Hawker Siddeley Canada, Inc., 950 F.2d 526, 528 (8th Cir. 1991); In re Minn. Asbestos Litig., 552 N.W.2d 242, 246 (Minn. 1996). The Court therefore need only consider whether the requirements of due process are satisfied to resolve SCS's jurisdictional challenge. Wessels, Arnold Henderson v. Nat'l Med. Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1995); Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 411 (Minn. 1992).
Due process allows a court to exercise personal jurisdiction over a nonresident defendant if the defendant has "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) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). The defendant's contacts with the state must be such that the defendant "should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Unilateral activity by one who claims a relationship with the defendant does not satisfy the minimum contacts requirement. Hanson v. Denckla, 357 U.S. 235, 253 (1958). Instead, the defendant must act so as to "purposefully avail itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id.
Five factors determine whether the exercise of personal jurisdiction over SCS comports with due process. See Burlington Indus., Inc. v. Maples Indus., Inc., 97 F.3d 1100, 1102 (8th Cir. 1996); Soo Line R.R., 950 F.2d at 529. The factors are: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum state; (3) the relation of the cause of action to the contacts; (4) the forum state's interest in the litigation; and (5) the convenience of the parties. Burlington Indus., 97 F.3d at 1102; Soo Line R.R., 950 F.2d at 529. The last two factors are secondary and are not determinative. Soo Line R.R., 950 F.2d at 529.
The third factor distinguishes general jurisdiction from specific jurisdiction. Burlington Indus., 97 F.3d at 1102. The defendant's maintenance of continuous and systematic contacts with a state may subject it to the state's general jurisdiction, that is, the state may assert personal jurisdiction over the defendant in a suit that neither arises out of nor relates to the defendant's contacts with the state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 n. 9 (1984); Morris v. Barkbuster, Inc., 923 F.2d 1277, 1280-81 (8th Cir. 1991). Specific jurisdiction refers to the state's assertion of personal jurisdiction over a defendant in a suit that arises out of or relates to the defendant's contacts with the state. Helicopteros, 466 U.S. at 414 n. 8; Morris, 923 F.2d at 1280. In this case, HighJump argues only that SCS is subject to specific jurisdiction.
Viewing the record in the light most favorable to HighJump, the Court concludes that the nature, quality, and quantity of SCS's contacts with HighJump in Minnesota support the Court's exercise of personal jurisdiction over SCS. SCS solicited a proposal from HighJump, and they later engaged in negotiations. The contract included a Minnesota choice-of-law provision. SCS personnel visited HighJump's offices in September or October 1998, March 1999, April 1999, and May 1999. At some point, SCS personnel attended a training seminar at HighJump's offices. Numerous phone calls and e-mails between HighJump personnel in Minnesota and SCS personnel in Washington took place in 1999 and 2000. In 2000, the parties amended the contract to provide for a multi-year software lease and support commitment. Although some of these contacts, standing alone, would be insufficient to establish personal jurisdiction, see Wessels, Arnold Henderson, 65 F.3d at 1434 (choice-of-law clause; contact via mail and telephone), the Court must consider SCS's contacts with Minnesota in the aggregate, see Northwest Airlines, Inc. v. Astraea Aviation Servs., Inc., 111 F.3d 1386, 1390 (8th Cir. 1997). Taken as a whole, the record reveals that SCS purposefully directed its activities at HighJump in Minnesota.
As to the third factor, the Court does not find SCS's contention that its contacts with HighJump in Minnesota are "only tenuously, if at all, related" to the action persuasive. According to SCS, the action involves HighJump's claim that SCS breached a contract by failing to pay for goods and services provided and delivered in Washington and SCS's contention that the goods and services were defective. SCS ignores, however, that the goods and services provided by HighJump resulted from SCS requesting a proposal from HighJump, the parties negotiating and executing a contract which required HighJump to spend hundreds of hours customizing the system in Minnesota, the parties holding meetings in Minnesota, and the parties communicating between Washington and Minnesota. The action therefore arises out of and relates to SCS's contacts with HighJump in Minnesota.
The fourth factor also supports the Court's exercise of personal jurisdiction over SCS because Minnesota has an interest in providing a forum for HighJump, a Minnesota corporation, to pursue a breach of contract action governed by Minnesota law against SCS, a Washington corporation. See Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1389 (8th Cir. 1995).
The fifth factor does not strongly favor either party's position. SCS's operations are limited to the Seattle-Tacoma area. HighJump does not have any offices or employees in Washington. Witnesses and evidence are located in Minnesota and Washington. Under these circumstances, some level of inconvenience is inevitable. Nevertheless, a plaintiff is generally entitled to select the forum in which to litigate. See id.
Having considered whether the exercise of personal jurisdiction over SCS comports with due process, the Court concludes that SCS has purposefully directed its activities at HighJump in Minnesota, and that the litigation arises out of and relates to those activities. The Court therefore denies SCS's motion to dismiss for lack of personal jurisdiction.
B. Venue
SCS moves in the alternative to transfer the action to the Western District of Washington. "For the convenience of the parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a) (2000). The party seeking a transfer ordinarily bears the burden of establishing that a transfer is warranted. Terra Int'l, Inc. v. Miss. Chem. Corp., 119 F.3d 688, 695 (8th Cir. 1997). A motion to transfer an action to another district should be denied unless the balance of factors strongly favors the moving party. Graff v. Qwest Communications Corp., 33 F. Supp.2d 1117, 1121 (D.Minn. 1999). In this case, the parties do not dispute that the action "might have been brought" in the Western District of Washington, but they disagree as to whether a transfer is warranted.
1. Convenience of the parties
As already discussed, some level of inconvenience is inevitable in this case because HighJump is a Minnesota citizen and SCS is a Washington citizen. SCS contends that litigating this case in Minnesota will inconvenience it more because, whereas HighJump operates on a national scale, SCS's operations are limited to the Seattle-Tacoma area. The Court does not find SCS's argument persuasive because HighJump does not have any offices or employees in Washington. In essence, transferring this case to Washington would merely shift the inconvenience from SCS to HighJump. The Court therefore concludes that this factor does not weigh in favor of transfer. See Janel Russell Designs, Inc. v. Mendelson Assocs., Inc., 114 F. Supp.2d 856, 862 (D.Minn. 2000); Norval Indus., Inc. v. Superior Cos., 515 F. Supp. 895, 899 (D.Minn. 1981).
2. Convenience of the witnesses
The convenience of the witnesses is an important factor in the transfer analysis. Graff, 33 F. Supp.2d at 1121; Nelson v. Master Lease Corp., 759 F. Supp. 1397, 1402 (D.Minn. 1991). Considerations relevant to this factor include the number of essential nonparty witnesses, their location, and the preference for live testimony. Graff, 33 F. Supp.2d at 1121; Nelson, 759 F. Supp. at 1402. This factor is not a contest between the parties as to which one presents a longer list of witnesses located in the potential districts. Graff, 33 F. Supp.2d at 1121-22; Nelson, 759 F. Supp. at 1402. The party seeking the transfer must identify the essential witnesses to be called and make a general statement of what their testimony will cover. Graff, 33 F. Supp.2d at 1121-22; Nelson, 759 F. Supp. at 1402. The court must examine the materiality and importance of the anticipated witnesses' testimony and determine whether the forum is convenient for them. Graff, 33 F. Supp.2d at 1122.
In this case, the parties identify two general categories of witnesses: employee witnesses and third-party witnesses. SCS's employee witnesses are in Washington; HighJump has employee witnesses in Minnesota. All of SCS's third-party witnesses are in Washington. They include former SCS employees, a consultant to SCS, and employees and former employees of businesses with which HighJump did business. According to SCS, they are familiar with the contract negotiations, implementation problems, meetings between SCS and HighJump, and hardware and software problems. HighJump's third-party witnesses, believed to be in Minnesota, include former HighJump employees and consultants. According to HighJump, they were involved in the system's development, the parties' meetings, communications between the parties, the amendment of the contract, and the system's implementation. Based on these brief, general descriptions, it appears that testimony from SCS's and HighJump's third-party witnesses will be important to resolve this case. If the case proceeds to trial in Minnesota, the Court will not be able to compel SCS's third-party witnesses to appear at trial. See Fed.R.Civ.P. 45(c). Likewise, if the case is transferred to Washington and proceeds to trial, the court in Washington will not be able to compel HighJump's third-party witnesses to appear. See id. Without regard to where the case is heard, important witnesses for both sides will be inconvenienced and might not appear at trial. The Court therefore concludes that this factor does not weigh in favor of transfer.
3. Interest of justice
Among the factors a court may consider in determining whether the interest of justice favors transfer are a plaintiff's choice of forum, the relative ability of the parties to bear the expense of litigating in a distant forum, the obstacles to a fair trial, and the advantages of having a local court determine issues of local law. Terra Int'l, 119 F.3d at 696; Graff, 33 F. Supp.2d at 1122. In this case, HighJump chose to pursue this action in Minnesota. In the absence of evidentiary support, the Court is unable to assess the distinction drawn by SCS between its "limited financial resources" and HighJump's "financial strength." The scope of their operations does not necessarily reflect their financial positions. In any case, neither party asserts that it is unable to bear the burden of litigating in Minnesota or Washington. SCS notes that if the action remains in Minnesota and the case goes to trial, the jury will not be able to visit its warehouses. The Court does not regard the inability of a jury in Minnesota to visit SCS's warehouses as an obstacle to a fair trial. If necessary, SCS can present videotapes, photographs, and diagrams to the jury. Finally, SCS raises the possibility that Washington law will govern its defenses and counterclaims. Whatever advantage there is to a Washington court applying Washington law is counterbalanced by the advantage of this Court applying Minnesota law pursuant to the contract's choice-of-law provision. For these reasons, the Court concludes that the interest of justice does not favor transfer.
In sum, SCS has not met its burden of establishing that the balance of factors strongly favors a transfer of this action to the Western District of Washington. The Court therefore denies SCS's motion.
IV. CONCLUSION
Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT:
1. Defendant SCS's Motion to Dismiss for Lack of Personal Jurisdiction [Docket No. 13] is DENIED.
2. Defendant SCS's motion to transfer the action to the Western District of Washington [Docket No. 13] is DENIED.