Opinion
Civil Action No. 02-6858
April 8, 2003
MEMORANDUM AND ORDER
Currently before the Court are Defendant's Motion to Dismiss the Complaint for Lack of Personal Jurisdiction and Improper Venue (Docket No. 7), Plaintiff's Response to Defendant's Motion to Dismiss (Docket No. 8), and Defendant's Reply Memorandum in Support of its Motion to Dismiss the Complaint for Lack of Personal Jurisdiction and for Improper Venue (Docket No. 11).
I. BACKGROUND
Plaintiff American High Mast Systems, Inc. ("American") is a Pennsylvania Corporation, with its principal place of business located in Chester County, Pennsylvania. Defendant J.F. Edwards Construction Company, ("Edwards") is a corporation organized under the laws of Iowa, with its principal place of business in Geneseo, Illinois. Defendant Edwards is an electrical contractor.
Defendant initiated contract discussions in the instant case, when it requested a Quotation on July 20, 1999, from Plaintiff's Downingtown, Pennsylvania office. The Quotation was for an Illinois DOT contract. In response, Plaintiff sent Defendant a Quotation for forty-eight (48) steel poles and lowering devices for the stated price of Seven Hundred Eighty-Nine Thousand Seven hundred Fifty-Nine Dollars ($789,759). The Quotation further specified that Plaintiff would ship the poles and lowering devices "F.O.B. factory." Moreover, Plaintiff attached Standard Terms and Conditions to the Quotation. These terms provided:
The issuance by a purchaser of a purchase order for products listed in this quotation shall constitute acceptance by the purchaser of these Terms and Conditions which shall supercede all additional or conflicting terms and conditions on purchaser's order. Unless otherwise agreed in writing by AMHS, any additional or conflicting terms contained in the purchaser's purchase order shall be construed as proposals for addition to the contract which were not accepted. Any contract resulted from AHMS's acceptance of purchaser's order shall be construed as an agreement made in the Commonwealth of Pennsylvania.
(Emphasis added).
Thereafter, on August 19, 1999, Defendant sent its Purchase Order to Plaintiff's Pennsylvania office. As indicated in the Quotation, American issued its Acknowledgment on September 21, 1999, again attaching its Terms and Conditions.
Plaintiff began its work on Defendant's Purchase Order by preparing a submittal package, including engineering drawings. Defendant approved and returned the package to American's Pennsylvania office on April 19, 2000.
Plaintiff manufactured the bargained-for products, and delivered them to the shipper at Plaintiff's Downingtown facility (F.O.B. factory) pursuant to the contract. After Plaintiff billed Defendant in May 2000, Defendant sent partial payments to Plaintiff American's Pennsylvania office, which were received on October 6, 2000 and August 13, 2001.
Plaintiff comes before the court seeking the balance of the contract payments. Defendant asserts that this case should be dismissed for lack of personal jurisdiction, or in the alternative, that venue is improper.
II. LEGAL STANDARD
While the onus of initiating the defense of lack of personal jurisdiction rests with the defendant, See Fed.R.Civ.Pro. 12(h)(1), once the defense is raised, the burden shifts to the plaintiff to prove that jurisdiction exists. See Poole v. Sasson, 122 F. Supp.2d 556, 557 (E.D.Pa. 2000). When determining whether personal jurisdiction exists, the court must construe all facts in a light most favorable to the plaintiff. See Pinker v. Roche Holdings LTD., 292 F.3d 361, 368 (3d Cir. 2002); see also Poole, 122 F. Supp.2d at 557. A plaintiff, however, may not rest solely on the pleadings to satisfy its burden. See Carteret Savings Bank, F. A., v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992). Rather, a plaintiff must sustain its prima facie burden with sworn affidavits or other evidence that demonstrate, with reasonable particularity, a sufficient nexus between the defendant and forum State to support jurisdiction. See id.; see also See Brooks v. Bacardi Rum Corp., 943 F. Supp. 559, 562 (E.D.Pa. 1996); North Penn Gas Co., v. Corning Natural Gas Corp., 897 F.2d 687, 689 (E.D.Pa. 1990).
A. Personal Jurisdiction 1. State Long-Arm Statute
Determining whether a court has personal jurisdiction over a defendant is a two-step process. A court must first discern whether the defendant is within the grasp of the State's Long-Arm Statute. See Fed.R.Civ.P. 4(e) (authorizing a district court to assert personal jurisdiction over a non-resident defendant to the extent permissible under the law of the State where the district court sits). Pennsylvania's Long Arm statute states, in pertinent part:
(b) Exercise of full constitutional power over non-residents — In addition to the provisions of subsection (a) the jurisdiction of the tribunals of this Commonwealth shall extend to all persons who are not within the scope of section 5301 (relating to persons) to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with the Commonwealth allowed under the Constitution of the United States. 42 Pa. Con. Stat. Ann. § 5322(b) (West 1981).
Pennsylvania's Long-Arm statute is, therefore, co-extensive with the Due Process Clause of the Fourteenth Amendment of the United States Constitution. See North Penn Gas Co., 897 F.2d at 690.
B. Due Process Clause
The function of the Due Process Clause, in personal jurisdiction matters, is to protect a defendant's liberty interest by ensuring that the defendant will not be bound by a court with which he has no meaningful "contacts, ties or relations." See Burger King Corp., v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 2181, 85 L.Ed.2d 528 (1985) (quoting International Shoe Co., v. Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 160, 90 L.Ed. 95 (1945)). Thus, the Due Process Clause provides some degree of notice that a defendant's activities may subject him to the jurisdiction of a foreign forum. Id. at 472. As such, the Due Process Clause "gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).
The boundaries of the Due Process Clause's limit on personal jurisdiction are defined by a two-part test. First, a defendant must have the requisite "minimum contacts" with the forum. See Burger King Corp.,, 471 U.S. at 474, 105 S.Ct. at 2183 (holding that the "constitutional touchstone" of personal jurisdiction analysis is whether the defendant purposefully established 'minimum contacts' in the forum state); see also Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001).
The initial inquiry into contacts requires an examination of the "relationship among the forum, the defendant and the litigation," Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2580, 53 L.Ed.2d 683 (1977), to establish whether the defendant "purposefully directed" his activities towards the residents of the forum state. See Vetrotex Certainteed Corp., v. Consolidated Fiber Glass Products Co., 75 F.3d 147, 150-51 (3d Cir. 1995) (quoting Burger King Corp., 471 U.S. at 472, 105 S.Ct. at 2182).
The Supreme Court has held that when a defendant purposefully directs its activities at residents of the forum State, that State has a:
'manifest interest' in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors. . . . Moreover, where individuals "purposefully derive benefit" from their interstate activities, . . . it may well be unfair to allow them to escape having to account in other States for consequences that arise proximately from such activities; the Due Process Clause may not readily be wielded as a territorial shield to avoid interstate obligations that have been voluntarily assumed.
Burger King Corp., 471 U.S. at 47473, 105 S.Ct. at 2183 (citations omitted).
Indeed, 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.'" See Vetrotex Certainteed Corp., 75 F.3d at 150 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958)).
After "minimum contacts" are established, the second step in the Due Process inquiry is to determine whether the exercise of jurisdiction would fall within "traditional notions of fair play and substantial justice." International Shoe Co., 326 U.S. 320, 66 S.Ct. at 160.
There are two types of personal jurisdiction: specific jurisdiction and general jurisdiction. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 n. 8-9, 104 S.Ct. 1868, 1872 n. 8-9, 80 L.Ed.2d 404 (1984). Specific jurisdiction is applicable when the cause of action arises out of, or is related to, the defendant's activities within the forum. See id.; see also North Penn Gas Co., 897 F.2d at 690. General jurisdiction may be invoked where a plaintiff's cause of action is unrelated to defendant's forum activities. Id. To establish general jurisdiction, the plaintiff must show that defendant has maintained "continuous and systematic" contacts with the forum state. See See Helicopteros Nacionales de Colombia, 466 U.S. 408, 414 n. 8-9, 104 S.Ct. 1868, 1872 n. 8-9.
III. DISCUSSION A. "Minimum Contacts" Analysis
When determining whether specific jurisdiction exists, a Court will consider, in conjunction with a contract, "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties actual course of dealing." Burger King Corp., 471 U.S. at 479, 105 S.Ct. at 2185. It is a totality of the circumstances analysis. See Remick, 238 F.3d at 254. In the instant case, Defendant attacks Plaintiff's assertion of specific jurisdiction under the rationale that the complaint fails to allege that Defendant "ever entered Pennsylvania in connection with the transaction, ever contemplated a continuing relationship with American High Mast beyond a single agreement, or, indeed, ever engaged in any additional activity whatsoever with any Pennsylvania entity." See Deft. Motion to Dis. p. 5.
If the Court finds that specific jurisdiction exists, there is no need for the Court to determine whether general jurisdiction exists. See Pinker v. Roche Holdings, LTD., 292 F.3d 361, 369 n. 1 (3d Cir. 2002).
1. Physical Presence Unnecessary
First, integral to a "minimum contacts" analysis is the tenet that physical presence in the forum is no longer a prerequisite for personal jurisdiction. Indeed, as the Supreme Court noted:
[i]t is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications across state lines, thus obviating the need for physical presence within a State in which business is conducted. So long as a commercial actor's effort's are "purposefully directed" toward the residents of another State, we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there. Burger King Corp., 471 U.S. at 476, 105 S.Ct. at 2184.
2. Telephone and Facsimile Communication
Second, communications via mail and telephone, sent by Defendant into the forum state, may be factored into the "minimum contacts" analysis. See Grand Entm't Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 482 (3d Cir. 1993). Moreover, facsimile and e-mail transmissions have become infinitely more prevalent in commercial transactions since Burger King Corp. was decided in 1985. Accordingly, facsimiles and e-mails directed to residents of the forum state will also be considered in the "minimum contacts" analysis.On July 20, 1999, Defendant sent a Request for Quotation, via facsimile, to American's Pennsylvania office, for the manufacture and sale of forty-eight (48) steel poles and lowering devices. See Affidavit of Robert Butterworth ¶ 13. American responded to Defendant, via facsimile, from the same Pennsylvania office.
Edwards subsequently accepted the Quotation and sent a Purchase Order to American's Downingtown, Pennsylvania office. Id. at ¶ 16. Thereafter, Defendant contacted Plaintiff at its Pennsylvania office about submittal packages and engineering drawings, (both prepared in Pennsylvania), as well as for questions about materials, manufacturing specifications, recalculations, delivery destinations, and numerous other topics. See Plnt. Exts. "A," and "B" attached to the Affidavit of Robert Butterworth.
Plaintiff also submits the affidavit of Glenn Sloanes, Plaintiff's Quality Control Manager, who attests that Defendant's employees contacted him in Pennsylvania, via phone calls and facsimiles, about quality control issues, specifically in reference to the instant case. See Plnt' Ext. "D." These affidavits establish numerous contacts that Defendant had with Pennsylvania.
Moreover, Defendant's initiation of each transaction indicates that Defendant "'purposely availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.'" See Vetrotex Certainteed Corp., 75 F.3d at 150 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958)).
3. Course of Dealing
The Third Circuit has held that when conducting a "minimum contacts" analysis in a breach of contract case, Burger King's consideration of factors such as: "prior negotiations," "future consequences," "terms of the contract" and "course of dealing" pertained only to the "dealings between the parties in regard to the disputed contract, not dealings unrelated to the cause of action." See Vetrotex Certainteed Corp., 75 F.3d at 154.
In the case, sub judice, the parties have a decade long relationship, during which they have negotiated and performed thirty-four transactions. Each one of those transactions is virtually identical to the others.
4. Agreement Made in Forum State
In each of the parties' thirty-four transactions, Defendant accepted Plaintiff's terms and conditions that any order "shall be construed as an agreement made in the Commonwealth of Pennsylvania." See Compl. Exh. "A." This provision effectively put the Defendant on notice that in the event of a breach, Defendant could be haled into a Pennsylvania court, thus fulfilling the predictability requirement imposed by the Due Process Clause. See World-Wide Volkswagen Corp., 444 U.S. at 297, 100 S.Ct. at 567.
5. "F.O.B. Factory"
In the instant case, Plaintiff shipped its goods "F.O.B. factory," where the risk of loss transferred to the Defendant upon delivery to the carrier in Pennsylvania. Under Pennsylvania law, when a Defendant voluntarily assumes obligations that impact on State commerce, and where Defendant should reasonably foresee that its obligations may have consequences in the State, the Defendant has purposely availed itself of the privilege of acting within the State for "minimum contact" purposes. See Erie Press Systems, A Division of EFCO, Inc., v. Shultz Steel Co., 548 F. Supp. 1215, 1220 (W.D.Pa. 1982) (holding that a contract term providing for a shipment to be delivered "F.O.B. Erie, Pa.," evidenced that the foreign defendant had purposefully availed itself of the protections and privileges of the law of the forum State); see also Thypin Steel Co., v. M/V Mikhail Strekalovskiy, CIV.A. No. 96-1799, 1997 WL 169437, * 4 (E.D.Pa. April 3, 1997) (citing the principle that contacts arise, for personal jurisdiction purposes, where an "F.O.B." term shifts the risk of loss to Defendant within the forum State); Ben Jerry's Homemade, Inc., v. Coronet Priscilla Ice Cream Corp., 921 F. Supp. 1206, 1210-11 (D. Vermont 1996) (citing the Second Circuit for the legal proposition that "when a party assumes the title and risk of loss of goods in a particular state, it enjoys the benefits and protections of the laws of that state in an overt physical manner, and thus may subject itself to that state's jurisdiction").
B. Fair Play and Substantial Justice 1. Attenuated Contacts
The Supreme Court has rejected any rigid jurisdictional test. Instead, the "contacts" and facts of each case must be weighed so as to determine whether the assertion of personal jurisdiction would comport with "fair play and substantial justice." See Burger King Corp., 471 U.S. at 486, 105 S.Ct. at 2189. Having determined that there are the requisite quantity of "contacts" with the forum State, the Court must now assess their quality. Indeed, the "quality and nature" of an interstate transaction may sometimes be so "attenuated," "random," or "fortuitous" that their existence cannot support an assertion that a defendant should reasonably expect to potentially be haled into court in a foreign jurisdiction. See id. In this case, Defendant's contacts are deliberate and intentional. Defendant actively sought out business in the forum State. Consequently, Defendant's own actions with the forum State provided the requisite Constitutional notice that Defendant may someday have to answer for its actions in a Pennsylvania court.
2. Fraud
Jurisdiction may not stem from a contract "whose terms have been obtained through 'fraud, undue influence, or overweening bargaining power,' and whose application would render litigation 'so gravely difficult and inconvenient that [a party] will for all practical purposes be deprived of his day in court." Burger King Corp., 471 U.S. at 486, 105 S.Ct. at 2189 (quoting the Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 12, 18, 92 S.Ct. 1907, 1914, 1917, 32 L.Ed.2d 513 (1972)). In the instant case, no fraud or undue influence has been alleged in any of the pleadings.
Litigating the instant case in Pennsylvania will not be unduly harsh for the Defendant. Many of the witnesses and evidence needed are within the forum State. Accordingly, litigating in Pennsylvania comports with the concepts of "fair play and substantial justice."
C. Transfer Venue
28 U.S.C. § 1391(a) provides:
A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
Moreover, 28 U.S.C. § 1391(c) states, in pertinent part:
For purposes of venue under this chapter, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.
Venue is proper, therefore, where Defendant is subject to personal jurisdiction. See Cooper v. Nationwide Mutual Ins. Co., CIV.A. No. 02-2138, 2002 WL 31478874, * 2 (E.D.Pa. Nov. 7, 2002).
Accordingly, because this Court determined that it may properly exercise personal jurisdiction over Defendant, venue is also proper.
An appropriate Order follows.
ORDER
AND NOW, this day of April, 2003, upon consideration of Defendant's Motion to Dismiss the Complaint for Lack of Personal Jurisdiction and Improper Venue (Docket No. 7), Plaintiff's Response to Defendant's Motion to Dismiss (Docket No. 8), and Defendant's Reply Memorandum in Support of its Motion to Dismiss the Complaint for Lack of Personal Jurisdiction and for Improper Venue (Docket No. 11), IT IS HEREBY ORDERED that Defendant's Motion is DENIED.
BY THE COURT: