Opinion
No. C02-2000Z
January 16, 2003
ORDER
This matter comes before the Court on defendant's motion to dismiss for lack of personal jurisdiction. For the reasons set forth below, the Court DENIES the motion.
BACKGROUND
Medtronic Physio-Control Corporation, a Washington corporation with its principal place of business located in Redmond, Washington, manufactures and sells external defibrillators. Complaint, docket no. 1, at ¶ 1. CardioReady, Inc., a Pennsylvania corporation, having no places of business outside Pennsylvania, sells products and provides training classes and certification programs aimed at preventing deaths from sudden cardiac arrest. Decl. of Matthew Barrer, docket no. 6, at ¶ 2. On September 27, 2000, CardioReady (d/b/a Reading Communications, Inc.) placed with Medtronic an order for 6 biphasic and 4 monophasic defibrillators; on December 29, 2000, CardioReady (again, d/b/a/ Reading) placed with Medtronic a second order, this time for 25 biphasic defibrillators. Decl. of Barrer, docket no. 6, Exhibits A and B. CardioReady's president, Matthew Barrer, negotiated those purchases with Reed Hubbard, a New Jersey resident employed as Medtronic's sales representative for the territory in which CardioReady was located. Decl. of Barrer, docket no. 6. at ¶¶ 3, 4; Decl. of Hubbard, docket no. 10, at ¶ 2. According to Barrer, Hubbard solicited business from him in Pennsylvania. Decl. of Barrer, docket no. 6, at ¶ 3. According to Hubbard, he never solicited CardioReady's business; rather, per Hubbard, Barrer initiated the contact and indicated an interest in starting a company to distribute Medtronic's products. Decl. of Hubbard, docket no. 10, at ¶¶ 5, 6. CardioReady (d/b/a Reading) placed a third, much larger order with Medtronic on March 29, 2001; this order, for 300 biphasic defibrillators (at a substantially reduced unit-price) and related products, to be delivered in three shipments of 100 each (in March, June, and September, 2001), was also negotiated by Hubbard and Barrer. Decl. of Barrer, docket no. 6, at ¶¶ 6, 7; Decl. of Hubbard, docket no. 10, at ¶ 8. Medtronic shipped the first 100 units on April 5, 2001, and CardioReady was, under terms of the agreement, to make payment in full for that shipment by May 5, 2001. Complaint, docket no. 1, at ¶¶ 8, 9. CardioReady received and accepted shipment of the first 100 units, but never received the remaining 200 units ordered. Decl. of Barrer, docket no. 6, at ¶ 8. According to the Complaint, docket no. I, CardioReady failed to make timely payment for the 100 units received and still owes Medtronic a principal of $83,919.04 and legal interest thereon from May 5, 2001, as well as costs and expenses involved in their recovery. Complaint, docket no. 1, at ¶¶ 10, 11, 12.
Medtronic filed its Complaint, docket no. I, on September 23, 2002. Medtronic alleges breach of contract (Count I) and seeks a declaratory judgment (Count II) that CardioReady and Medtronic were never legally related as distributor (or dealer) to supplier and that no sort of continuing legal relationship now exists between the two. On November 14, 2002, CardioReady filed a motion to dismiss for lack of personal jurisdiction, docket no. 5. Medtronic filed an answer thereto, docket no. 8, on December 2, 2002, and on December 5, 2002, CardioReady filed a reply, docket no. 15. A number of other facts are now on the record via several declarations, and the Court will here summarize those pertinent to the question of personal jurisdiction over CardioReady.
For the period from October 2000 through September 2001, CardioReady made 27 separate purchases from Medtronic. Decl. of Kari Leith, docket no. 12, at ¶ 4 and Exhibit A. (Indeed, after the shipment of the 100 defibrillators in April 2001, CardioReady submitted to Medtronic 22 purchase orders for additional products of approximately $10,000 in value. Plaintiff's Brief in Opposition, docket no. 8, at 4) Representatives of the two parties exchanged numerous email messages and spoke frequently by telephone during that period. Decl. of Leith, docket no. 12, at ¶ 5 and Exhibit B.
As early as October 2000, Barrer was engaged in conversations with Medtronic's management as to the possibility of CardioReady's becoming a Medtronic distributor. Decl. of Hubbard, docket no. 5, at ¶ 5. By December 2000, attorneys for the parties were negotiating proposed changes to Medtronic's Standard Dealer Agreement. Decl. of Traci Umberger, docket no. 13, at ¶ 3. Negotiations were still proceeding as of June 2001. Decl. of Alissa Federspiel, docket no. 9, at ¶ 4.
After CardioReady failed to pay in full, by May 5, 2001, for the first 100 defibrillators, the parties signed, on July 27, 2001 a repayment agreement, whereunder CardioReady agreed to pay the remaining debt of $194,861.33 by making to Medtronic weekly payments of $24,357.67 from August 8, 2001, through September 26, 2001. Declaration of Penny Jones, docket no. 11, ¶¶ 3, 4 and Exhibit B. After making some payments, CardioReady has refused to pay the remaining $83,919.04. Id. at ¶ 4.
Standard
Whether a party is subject to personal jurisdiction in a federal court sitting in diversity is determined by reference to the laws of the state in which the federal court sits. Thos.P. Gonzalez Corp. v. Consejo Naccional de Produccion de Costa Rica, 614 F.2d 1247, 1250 (9th Cir. 1980). When a motion to dismiss for lack of personal jurisdiction is made as a defendant's initial response to a complaint, Fed.R.Civ.P. 12(b)(2) controls. Rule 12(b)(2) states that the court may consider evidence presented in affidavits to assist it in its determination and may also order discovery on the jurisdictional issues. Doe v. Unocal Corp., 248 F.3d 915, 922 (9th Cir. 2001). However, when a district court acts on a defendant's motion to dismiss without holding an evidentiary hearing, the plaintiff need make only a prima-facie showing of jurisdictional facts to withstand the motion to dismiss. Id.; Data Disc, Inc. v. Systems Tech. Assoc., Inc., 557 F.2d 1280, 1285 (9th Cir. 1977). In this context, to make a prima-facie showing is to produce admissible evidence which, if believed, would be sufficient to establish the existence of personal jurisdiction. See WNS, Inc. v. Farrow, 884 F.2d 200, 203-204 (5th Cir. 1989). In scrutinizing a motion to dismiss based upon lack of personal jurisdiction, a court looks first to the uncontroverted allegations of the complaint, affidavits, and depositions. Pure. Ltd. v. Shasta Beverages, Inc., 691 F. Supp. 1274, 1277 (D.Haw. 1988). Unless directly controverted, the plaintiff's version of the facts is taken as true. Doe, 248 F.3d at 922. Conflicts in the evidence set forth in the parties' affidavits must be resolved in the plaintiff's favor. Id. Eventually, however, the plaintiff must establish jurisdiction by a preponderance of the evidence either at a pretrial evidentiary hearing or at trial. Data Disc, 557 F.2d at 1285.
DISCUSSION
There are two recognized bases for personal jurisdiction over a non-resident defendant; (1) general jurisdiction, which arises when a defendant's contacts with the forum state are so pervasive as to justify the exercise of jurisdiction over the person in all matters, and (2) specific jurisdiction, which arises when the defendant's particular contacts within the forum state themselves give rise to the subject litigation. Indiana Plumbing Supply, Inc. v. Standard of Lynn, Inc., 880 F. Supp. 743, 95 (C.D.Cal. 1995) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)).
GENERAL PERSONAL JURISDICTION . Sitting in diversity, this Court may exercise general personal jurisdiction, as authorized by RCW 4.28.080 (10), whenever a nonresident defendant conducts in the state of Washington substantial and continuous business of such character as to give rise to a legal obligation. CTVC of Hawaii Co., Ltd. v. Shinawatra, 82 Wash.App. 699, 709 (1996); see Crose v. Volkswagenwerk Aktiengesellschaft, 88 Wn.2d 50, 54 (1977), The Crose court observed that five factors are relevant in determining whether the exercise of general jurisdiction over a nonresident defendant violates due process: (1) the interest of the state in providing a forum for its residents; (2) the ease with which the party asserting jurisdiction could gain access to another forum; (3) the amount, kind, and continuity of activities carried on by the foreign corporation in the state; (4) the significance of economic benefits accruing to the foreign corporation as a result of activities purposefully conducted in the state; and (5) the foreseeability of injury resulting from the foreign corporation's actions. 88 Wn.2d at 57, 558 P.2d at 768. Later courts have held that the primary factor of these five is the third. See MBM Fisheries, Inc. v. Bollinger Machine Shop and Shipyard, Inc., 60 Wash.App. 414, 420 (1991); Hein v. Taco Bell, Inc., 60 Wash.App. 325, 330 (1991).
The fifth factor, foreseeability of injury, appears to have been replaced by the foreseeability that the defendant will be haled into court in the forum state. Hein v. Taco Bell, Inc., 60 Wash. App. 325, 331 (1991).
CardioReady's contacts with Washington are isolated and minimal and relate only to Medtronic. They do not support a finding that CardioReady engaged in continuous or substantial activity in this state. The negotiations resulting in the contracts whereunder CardioReady was to purchase defibrillators from Medtronic occurred wholly in Pennsylvania. The negotiations regarding CardioReady's becoming a Medtronic distributor bore no relation to the breach of contract action here. CardioReady neither advertised nor sold any Medtronic products in Washington. CardioReady did place a total of 27 orders for Medtronic equipment. but each of these was a singular event, not the result of a distributorship agreement between the parties. The parties did negotiate a repayment schedule for the balance owing on the shipment of the first 100 defibrillators, but that schedule was predicated on the prior existence of a contract signed in Pennsylvania for goods delivered in Pennsylvania.
Nor do CardioReady's contacts with Washington, each individually de minimis, collectively constitute continuous and substantial contact with Washington. See, e.g., Helicouteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-18 (1984); Shute v. Carnival Cruise Lines, 897 F.2d 377, 381 (9th Cir. 1988), cert. granted, 498 U.S. 807 (1990).
SPECIFIC PERSONAL JURISDICTION. Sitting in diversity, this Court may exercise specific personal jurisdiction over a nonresident defendant only if jurisdiction is proper under Washington's long-arm statute and comports with federal constitutional due process principles. See Fireman's Fund Ins. Co. v. Nat. Bank of Cooperatives, 103 F.3d 888, 893 (9th Cir. 1996); Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1484 (9th Cir. 1993). Washington's long-arm statute, RCW 4.28.185, is co-extensive with the outer limits of constitutional due process, Shute, 113 Wn.2d at 766, and as such prescribes that personal jurisdiction can be asserted over a non-resident defendant only if the defendant has minimum contacts with the forum state such that the exercise of jurisdiction does not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. State of Washington, Office of Unemployment Compensation and Placement, 326 U.S. 310, 316 (1945).
In an effort to clarify the "minimum contacts" standard, the Ninth Circuit has created a three-part test. Plaintiffs must demonstrate that (1) some action must be taken whereby defendant purposefully avails itself of the privilege of conducting activities in the State of Washington, thereby invoking the benefits and protections of Washington's laws; (2) but for defendant's Washington-related activities, the plaintiff's claim would not have arisen; and (3) the exercise of jurisdiction is reasonable and consistent with traditional notions of fair play and substantial justice. Ballard v. Savage, 65 F.3d 1495, 1500 (9th Cir. 1995); Omeluk v. Langsten Slip Batbyggeri A/S, 52 F.3d 267, 270 (9th Cir. 1995); Grange Ins. Ass'n. v. State, 110 Wn.2d 752, 758 (1988). All three prongs of the test must be satisfied before specific jurisdiction may be exercised. Id. Using these factors, therefore, the Court will examine whether it has specific jurisdiction over defendant, taking plaintiff's allegations as true.
Purposeful Availment. In Sinatra v. National Enquirer, Inc., the Ninth Circuit explained that "[p]urposeful availment analysis examines whether the defendant's contacts with the forum are attributable to his own actions or are solely the actions of the plaintiff." 854 F.2d 1191, 1195 (9th Cir. 1988). Thus, "[i]n order to have purposefully availed oneself of conducting activities in the forum, the defendant must have performed some type of affirmative conduct which allows or promotes the transaction of business within the forum state." Id. in determining whether there has been "purposeful availment," the Ninth Circuit "distinguish[es] contract from tort actions." Roth v. Garcia Marquez, 942 F.2d 617, 621 (9th Cir. 1991). In tort cases, "[t]he three elements of purposeful availment . . . are (1) intentional action; (2) aimed at the forum state; and (3) causing harm that the defendant should have anticipated would be suffered in the forum state." Ziegler v. Indian River County, 64 F.3d 470 (9th Cir. 1995). "In the contract context, however, Burger King specifically noted that the existence of a contract with a resident of the forum state is insufficient by itself to create personal jurisdiction over the non-resident." Roth, 942 F.2d at 621. Instead, only "parties who `reach beyond one state and create continuing relationships and obligations with citizens of another state' are subject to regulation and sanction in the other State for the consequences of their activities." Id. (emphasis added). As this case contains a cause of action sounding only in contract, the Court will analyze the facts under the more demanding, contract standard only.
RCW 4.28.185 states in pertinent part (with emphasis added):
(1) Any person. whether or not a citizen or resident of this state, who in person or through an agent does any of the acts in this section enumerated, thereby submits said person, and, if an individual, his personal representative, to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of said acts:
(a) The transaction of any business within this state[.]
In Griffiths Sprague Stevedoring Co. v. Bayly, Martin, Fay, Inc., 71 Wn.2d 679 (1967), Bayly was doing business in California, and Griffiths was doing business in Washington under the name Farwest General Agency. Bayly asked Farwest to obtain insurance through Farwest's London broker, and Farwest complied. According to the Washington Supreme Court, long-arm jurisdiction was proper because, "[w]hen defendant, Bayly, . . . ordered insurance by telephone and mail from or through plaintiff, Farwest General Agency, . . . it overtly performed acts making it a party to and participant in a business transaction in Washington even though it was contemplated by Bayly . . . that the insurer might be a foreign agency." Id.
In Sorb Oil Corp. v. Batalla Corp., 32 Wash.App. 296, 299 (1982), Sorb contacted Batalla in Texas and offered products for sale. Batalla later ordered products on several occasions over a 20-month period. It placed its orders by phoning Sorb in Washington. When Batalla failed to pay, Sorb sued in Washington, but the trial court dismissed the action for lack of jurisdiction. Reversing, the appellate court said, "[a] party who does not initiate the business contact is not thereby immune from personal jurisdiction of Washington courts if a business relationship subsequently arises." 32 Wash.App. at 299, (emphasis added). The court held that Washington had long-arm jurisdiction, notwithstanding that Sorb had first contacted Batalla in Texas.
In Cofinco of Seattle. Ltd. v. Weiss, 25 Wash.App. 195 (1980), Cofinco was a Washington corporation and Weiss was apparently a New York resident. Weiss was selling shoes in New York when he was asked by Cofinco's president if he wished to sell shoes for Cofinco on the east coast. He agreed. At that point, there was an oral contract of employment, made "by phone at a time when [Weiss] was in New York and [Cofinco's president] was in Seattle." 25 Wash.App. at 196. Pursuant to this contract, Cofinco advanced money and goods, which it apparently sent to Weiss in New York. Weiss never came to Washington, and he never engaged in business here, except as already stated. When the arrangement went awry, Cofinco sued to recover its advances, but the trial court dismissed for lack of personal jurisdiction. The appellate court reversed, holding that Weiss had purposefully availed himself of the privilege of conducting activities within the State of Washington. 25 Wash.App. at 197.
Washington courts have made it clear that a finding of minimum contacts does not require the physical presence of a defendant, provided that a business relationship has arisen between the parties. In view of the ever more sophisticated means of electronic communications, this result is not surprising.
In this case, a business relationship had arisen between the parties. CardioReady has reached beyond Pennsylvania and created continuing relationships and obligations with plaintiff and has transacted business in this jurisdiction.
Reasonable Jurisdiction, Fair Play and Substantial Justice. Once it has been determined that a defendant purposefully established minimum contacts with a forum state, the burden shifts and the defendant must "present a compelling case that the presence of some other consideration would render justice unreasonable." Dole Food Co., v. Watts, 303 F.3d 1104, 1114 (9th Cir. 2002). The Dole court set forth seven factors to be used in determining whether the exercise of jurisdiction comports with fair play and substantial justice. These are:
(1) the extent of the defendant's purposeful injection 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 plaintiffs interest in convenient and effective relief; and
(7) the existence of an alternative forum.
Id. (citing Caruth v. International Psychoanalytical Ass'n, 59 F.3d 126, 128-29, (9th Cir. 1995). No one factor is dispositive; the Court must balance all seven. Core Vent Corp. v. Nobel Industries AB, 11 F.3d 1482, 1488 (9th Cir. 1993).
As to the first factor, the record shows that CardioReady injected itself into the forum state's affairs. As to the second, the burden on defendant of defending in Washington would be roughly equal to the burden on plaintiff in pursuing the action in Pennsylvania. As to the third, the sovereignty of Pennsylvania is in no way threatened. As to the fourth, the willingness of the Washington courts to adjudicate disputes akin to the subject contract dispute argues that Washington has a significant interest in doing so here. As to the fifth, the complaint has been filed and initial arguments have been propounded. Requiring the case to be resolved elsewhere would only delay its resolution. As to the sixth, clearly the present forum is most convenient to the plaintiff. As to the seventh, a federal district court in Pennsylvania could also serve as an alternate forum. On balance, then, the Court finds that adjudicating the case in this forum comports with the traditional requirements of fair play and substantial justice.
CONCLUSION
For the foregoing reasons, the Court DENIES defendant's motion to dismiss for lack of personal jurisdiction.
IT IS SO ORDERED.