Summary
In Bell Helicopter v. C C Helicopter Sales, 3:00-CV-1516-X, 2001 WL 290569 (N.D.Tex. Mar.21, 2001) (Kendall, J.), the Court refused to assert personal jurisdiction over the nonresident defendants despite the plaintiff's urging that it had suffered the effects of defendants' tortious conduct within the state.
Summary of this case from Management Insights, Inc. v. CIC Enterprises, Inc.Opinion
Case No. 3:00-CV-1516-X
March 21, 2001
MEMORANDUM OPINION AND ORDER
Before the Court are: Defendants' Motion to Dismiss for Lack of In Personam Jurisdiction, or, Alternatively, Motion to Transfer Venue and Court Ordered Venue Statement, Motion to Dismiss Due to Forum Non Conveniens and Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a), filed together January 16, 2001; Plaintiff's Response, filed February 9, 2001; and Plaintiff's Venue Statement, filed January 12, 2001. For the reasons stated below, Defendants' Motion to Dismiss for Lack of Personal Jurisdiction is GRANTED. Alternatively the Court GRANTS Defendants' Motion to Dismiss for Improper Venue. Defendants' Motions to Transfer Venue or Dismiss for Forum Non Conveniens are DENIED as moot.
I. Background
This case is a lawsuit by Bell Helicopter against two nonresident companies engaged in the business of repairing and rebuilding damaged helicopters. Defendant C C Helicopters is a Delaware Corporation. Defendant Tom Cannon Associates Ltd. is a Canadian Corporation with is principal place of business in Ontario, Canada. The facts relevant to this Court's personal jurisdiction over Defendants are largely undisputed. In May of 1986, a Model 206B Bell helicopter crashed near Pine Springs, Texas, in Culberson County. See Cannon Aff., at 2, ¶ 1. Defendants (or one of them), subsequently entered a contract to purchase the wreckage from a dealer in Midlothian, Texas, and came to Texas to haul the wrecked helicopter out of the state to Defendants' rebuilding facilities. Defendants claim that the helicopter was rebuilt by a company in Ontario, Canada, and that components for the rebuilt helicopter were purchased all over North America. See Cannon Aff. at 2-4, ¶¶ 5, 8. Once the helicopter was rebuilt, Defendants sold the helicopter to HTA Helicopteros, a company located in Algarve, Portugal. Cannon Aff. at 2, ¶ 4.
Plaintiff has sued Defendants on the grounds that they improperly mixed and matched components on the rebuilt helicopter, attaching parts that were designed for use only on Bell Model 206A helicopters. Plaintiff alleges that Defendants "falsely represented" that the helicopter was built and manufactured entirely by Bell, and that the defective rebuilt helicopter was grounded by Portuguese authorities after the FAA revoked its previously granted Expert Certificate of Airworthiness. See Pl.'s First Am. Compl. ¶¶ 14-17, 19. Defendants deny the allegations, and counterclaim for fraud and defamation. See Def.'s Jt. Answer. Defendants also assert as an affirmative defenses that this Court lacks personal jurisdiction over them and that venue is improper, defenses which are the subject of the present motion to dismiss.
II. Analysis
The plaintiff bears the burden of proving the Court's personal jurisdiction over a nonresident defendant. See Bullion v. Gillespie, 895 F.2d 213, 216-17 (5th Cir. 1990). A plaintiff "need only present facts sufficient to constitute a prima facie case of personal jurisdiction." Id. at 217 (citing WNS, Inc. v. Farrow, 884 F.2d 200, 203 (5th Cir. 1989)).
To establish that a court has personal jurisdiction over a party, the plaintiff must show (1) that the defendant has "purposefully availed himself of the benefits and protections of the forum state by establishing minimum contacts," and (2) that the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice.Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1994) (citations omitted). Minimum contacts may be established by showing contacts that are specific to the dispute, or contacts that are "continuous and systematic," giving rise to general jurisdiction.Id. In the present case, Plaintiff does not contend that this Court has general jurisdiction over the Defendants. Instead, Plaintiff asserts that this Court has specific jurisdiction, because Defendants have minimum contacts with this jurisdiction that are related to the present dispute.
"It is well settled that specific jurisdiction may arise without the nonresident defendant's ever stepping foot upon the forum state's soil or may arise incident to the commission of a single act directed at the forum. The appropriate inquiry is whether the defendant purposefully availed [itself] of the privilege of conducting activities in-state, thereby invoking the benefits and protections of the forum state's laws."Bullion, 895 F.2d at 216. When specific jurisdiction is at issue, "a court must examine the relationship among the defendant, the forum, and the litigation." Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1171 (5th Cir. 1985). Plaintiff has two theories to support specific jurisdiction. This Court is persuaded by neither.
A. Purchase of the Wreckage
Plaintiff claims that the Court has specific jurisdiction over Defendants because they purchased a large portion of the subsequently rebuilt helicopter wreckage in Ellis County. Defendants do not dispute that Tom Cannon entered into a contract to purchase the wreckage from a seller in Midlothian, apparently on behalf of Defendant CC Helicopter Sales, see Cannon Aff. at 2, ¶ 2, and came into Texas for half a day to collect the wreckage and haul it out of the state.
There is no exact formula prescribing the degree of relation that needs to exist between the specific contact identified by the Plaintiff and the cause of action that is the basis of the lawsuit. The Fifth Circuit has stated that courts should evaluate whether the defendant "had the necessary minimum contacts with Texas as a result of affirmative actsperformed in connection with the subject matter of the litigation." Patterson v. Dietze, Inc., 764 F.2d 1145, 1146 (5th Cir. 1985) (emphasis added). "Purposeful forum-directed activity-even if only a single substantial act-may permit the exercise of specific jurisdiction in an action arising from or related to such acts." Ham v. La Cienega Music Co., 4 F.3d 413, 415-16 (5th Cir. 1993). "The Supreme Court has held that mere purchases from the forum state, even if they are made at regular intervals, will not be enough to establish personal jurisdiction over a nonresident defendant if the purchases at issue are not related to the plaintiff's cause of action." Fix My PC, L.L.C. v. N.F.N. Assoc., Inc., 48 F. Supp.2d 640, 644 (N.D. Tex. 1999) (citingHelicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 418 (1984)). An identified contact will not support specific jurisdiction if it in no way relates "to the merits" of the plaintiff's cause of action.See Ham, 4 F.3d at 416; Aviles v. Kunkle, 978 F.2d 201, 204-05 (5th Cir. 1992) (evaluating whether Plaintiff's cause of action was "based upon" the activities in Texas).
Plaintiff has failed to demonstrate that Defendants' contract to purchase the wreckage from Quality Aircraft in Midlothian, Texas relates to the instant dispute. The transaction in which Defendants purchased the wreckage is completely separable from the steps Defendants took to rebuild and resell the helicopter. Bell's causes of action are in no way reliant on where Defendants purchased bits and pieces of the rebuilt helicopter, but are instead reliant on Defendants' alleged improper mixing and matching of various Bell helicopter models and subsequent passing off of the helicopter as a Model 206B. Therefore, Plaintiff's wreckage-purchase theory is insufficient to support personal jurisdiction over Defendants.
B. "Effects" in Texas
Plaintiff also argues that this Court has jurisdiction over Defendants because their tortious behavior injured Bell in Texas. However, the "effects" doctrine does not reach as far as Plaintiff contends. What Plaintiff calls the effects doctrine largely originated in Calder v. Jones. 465 U.S. 783 (1984). In that case, the Supreme Court held that a Court in California had specific jurisdiction over reporters from the Florida-based National Enquirer in a suit for libel. Id. at 791. The Court stated that the reporters could reasonably anticipate being haled into court in California because "their intentional, and allegedly tortious, actions were expressly aimed at California. . . . [T]hey knew that the brunt of the injury would be felt by respondent in the State in which she lives and works and in which the National Enquirer has its largest circulation." Id. at 789-90.
In the present case, Plaintiff's causes of action do not involve either a level of intent, or degree of purposeful direction toward the forum state that have been held sufficient to confer specific jurisdiction in the "effects" doctrine cases cited. In Dakota Indus., Inc. v. Dakota Sportswear, Inc., the Court found that a South Dakota District Court had specific jurisdiction over a defendant alleged to have infringed on the trademark of a South Dakota company. 946 F.2d 1384, 1391 (8th Cir. 1991). While the Eighth Circuit placed substantial emphasis on the fact that the plaintiff had shown that the defendant engaged in intentional and knowing infringement, the Court also relied on the fact that some of the "`passing off' occurred in South Dakota," thus making it reasonable for the defendant to anticipate being haled into court there. Id. Likewise in Panavision Int'l, L.P. v. Toeppen, the Ninth Circuit found that intentionally registering the trademark of another as a domain name was not sufficient to confer specific jurisdiction over the defendant. 141 F.3d 1316, 1322 (9th Cir. 1998).
The Court stated:
[T]here must be `something more' to demonstrate that the defendant directed his activity toward the forum state. Here . . . [Defendant] engaged in a scheme to register Panavision's trademarks as his domain names for the purpose of extorting money from Panavision. His conduct, as he knew it likely would, had the effect of injuring Panavision in California where Panavision had its principal place of business.Id. (citations omitted). The Court also noted that as part of the defendant's scheme, he sent a letter to Panavision in California demanding $13,000. Id. at 1323.
The Fifth Circuit's interpretations of Calder v. Jones also caution against exercising personal jurisdiction purely based on the allegation of an intentional tort and the fact that injury alone is felt in the forum state. In Southmark Corp. v. Life Investors, Inc., Plaintiff Southmark sued Life and another defendant, USLICO, claiming that Life had breached a contract to sell shares to Southmark, and that USLICO had tortiously interfered with the sale. 851 F.2d 763 (5th Cir. 1988). The Court stated that:
[W]hile it may be true that USLICO agreed to buy the stock knowing that Southmark has its principal place of business in Texas, and that Southmark is therefore a Texas resident for jurisdictional purposes, we do not think this fact standing alone would cause USLICO to anticipate being haled into a Texas court to answer for its conduct.Id. at 773 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)). The Court found instead believed that under the circumstances, the fact that Southmark had its business in Texas was a "mere fortuity," not justifying the exercise of personal jurisdiction over USLICO. Id.
Plaintiff's reliance on the more recent Fifth Circuit case, Guidry v. United States Tobacco Co., Inc., is misplaced. 188 F.3d 619 (5th Cir. 1999). In Guidry, the Court did find that the exercise of Calder v. Jones "effects" personal jurisdiction was proper. In that case, the Plaintiffs sued a tobacco manufacturers association for tobacco-related health injuries, on theories including intentional misrepresentation, fraud, and breach of warranty.Id. at 623 n. 1. The Plaintiffs claimed that the tobacco association had nationally circulated erroneous and deceitful information about the health effects of tobacco, and that such communications were circulated in Louisiana as elsewhere. Id. at 626. While all of Defendants' actions had occurred outside the state, their nationally publicized statements constituted intentional behavior, expressly aimed at the forum state. The Court stated, "[t]he trade associations are not charged with mere untargeted negligence endangering only economic or reputational interests. Rather, their alleged intentional and negligent tortious actions were knowingly initiated and aimed at users and potential consumers of tobacco products in Louisiana, including [Plaintiffs]." Id. at 630.
In the present case, Plaintiff does not argue that any of Defendants' conduct resulting in injury was expressly and intentionally aimed at Texas. There was no "passing off" of a diluted trademark in Texas; the sale at issue was made to a company in Portugal. Defendants did not contact Plaintiff in Texas in any way, or do or communicate anything in Texas related to the sale of the rebuilt helicopter. In fact, on the facts present in this case, the dilution of trademark and trademark counterfeiting causes of action are not the sort of "aimable" intentional torts that were present in Calder (libel), Panavision (trademark extortion), or Guidry (fraud and misrepresentation). Plaintiff's argument for minimum contacts in the present case is much more like the one that was rejected by the Fifth Circuit inSouthmark, and consists of the general allegation that Defendants knew that Plaintiff has its principal place of business in Texas, and so must have known it was causing an injury here. The "something more" demonstrating purposeful availment is lacking.
Because Plaintiffs have failed to demonstrate personal jurisdiction, venue is also improper in this district under 28 U.S.C. § 1391(b). No defendant "resides" in this district because neither was subject to this Court's personal jurisdiction at the time the action was commenced. 28 U.S.C. § 1391(b)(1), (c). A substantial part of the events or omissions giving rise to this claim did not occur in this district. 28 U.S.C. § 1391(b)(2). No defendant may be "found" in this district. 28 U.S.C. § 1391(b)(3). Even if this Court did have personal jurisdiction over the Defendants, rendering venue proper under 28 U.S.C. § 1391(b)(1) and (c), the Court still seriously questions whether keeping a case so tenuously connected to this district would best serve the convenience of the parties and witnesses and the interest of justice, under 28 U.S.C. § 1404(a) or under the doctrine of forum non conveniens. However, given the absence of in personam jurisdiction, the Court need not determine where this action should in fact be maintained.
III. Conclusion
For the reasons stated above, the Court GRANTS Defendants' Motion to Dismiss for Lack of Personal Jurisdiction, or alternatively Dismisses for Improper Venue. The Court DENIES Defendants' Motions to Transfer Venue or Dismiss for Forum Non Conveniens as moot.
SO ORDERED.