Opinion
No. A05-1567.
Filed August 15, 2006.
Appeal from the District Court, Hennepin County, File No. Ct 05-002388.
Richard G. Jensen, Scott A. Johnson, Fabyanske, Westra, Hart Thomson, P.A., (for appellant)
Jessica R.F. Grassley, Faegre Benson L.L.P., (for respondent)
Considered and decided by Hudson, Presiding Judge; Wright, Judge; and Worke, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Appellant challenges the district court's dismissal of appellant's complaint for lack of personal jurisdiction over respondent, arguing that Minnesota courts have specific and general personal jurisdiction and that the district court erred in declining to continue the matter to permit jurisdictional discovery. We affirm.
FACTS
Appellant VIAD Corp. is a Delaware corporation authorized to do business in Minnesota. VIAD, which has offices in Brooklyn Park, designs, produces, and installs tradeshow exhibits. Respondent McCormick International USA, Inc. is an Iowa corporation. Its global corporate headquarters are in Doncaster, England, and its principal offices are in Pella, Iowa. McCormick manufactures and sells tractors and other heavy farm equipment.
During August and September 2003, VIAD and McCormick entered into three written agreements for the performance of work by VIAD. The first agreement provided that VIAD would design a tradeshow-exhibit marketing environment and create a tent structure. The second and third agreements required VIAD to install and dismantle the tent structure at tradeshows in Grand Island, Nebraska, and Henning, Illinois. In exchange for VIAD's performance, McCormick agreed to pay an estimated total of $113,206.
The tent structure was manufactured in Canada and shipped directly from Canada to the tradeshow in Nebraska. VIAD installed the tent structure at both the Nebraska and Illinois tradeshows. McCormick refused to pay for VIAD's performance, however, because of alleged problems with the tent structure's design, construction, and installation.
VIAD sued McCormick in Hennepin County District Court for breach of contract and unjust enrichment. McCormick moved to dismiss VIAD's claims under Minn. R. Civ. P. 12.02(b) for lack of personal jurisdiction. Following a hearing, the district court granted the motion to dismiss, concluding that Minnesota lacked both specific and general personal jurisdiction over McCormick. This appeal followed.
DECISION I.
VIAD contends that the district court erred by dismissing the matter for lack of specific and general personal jurisdiction. Whether personal jurisdiction exists is a question of law, which we review de novo. Nw. Airlines, Inc. v. Friday, 617 N.W.2d 590, 592 (Minn.App. 2000). Although it is the plaintiff's burden to prove "the minimum contacts necessary to satisfy due process," in opposition to a motion to dismiss, the plaintiff "need only make a prima facie showing of sufficient Minnesota-related activities through the complaint and supporting evidence, which will be taken as true." Hardrives, Inc. v. City of LaCrosse, 307 Minn. 290, 293, 240 N.W.2d 814, 816 (Minn. 1976). In a close case, doubts should be resolved in favor of retaining jurisdiction. Nw. Airlines, 617 N.W.3d at 592.
A Minnesota court can exercise personal jurisdiction over a nonresident defendant when personal jurisdiction is authorized by the Minnesota long-arm statute, Minn. Stat. § 543.19 (2004), and the nonresident defendant has certain "minimum contacts" with the forum state as required by constitutional due-process guarantees. Domtar, Inc. v. Niagara Fire Ins. Co., 533 N.W.2d 25, 29 (Minn. 1995). Minnesota's long-arm statute is coextensive with the constitutional limits of due process. Valspar Corp. v. Lukken Color Corp., 495 N.W.2d 408, 410-11 (Minn. 1992).
Due-process standards are met by a plaintiff's showing that a nonresident defendant's "minimum contacts" with the forum state are such that prosecution of the lawsuit in the selected forum does not offend "traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 160 (1945). The minimum-contacts requirement may be satisfied by demonstrating either "general" or "specific" personal jurisdiction. Domtar, 533 N.W.2d at 30; see also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn. 8-9, 104 S. Ct. 1868, 1872 nn. 8-9 (1984) (distinguishing between general and specific jurisdiction); Valspar, 495 N.W.2d at 411 (same).
General personal jurisdiction exists when the nonresident defendant has "continuous and systematic" contacts with the forum state. Helicopteros Nacionales, 466 U.S. at 415-16, 104 S. Ct. at 1872-73. Specific personal jurisdiction exists when the cause of action arises out of or is related to the defendant's contact with the forum state. Id. at 414 n. 8, 104 S. Ct. at 1872 n. 8. A single contact with the forum state may be sufficient to establish specific jurisdiction if the cause of action arose out of that contact. See McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 201 (1957) (finding jurisdiction over insurance company when contract was delivered in forum state, premiums were mailed from forum state, and insured was resident of forum state at time of death). "When a claim arises out of a contract that has a `substantial connection' with the forum state, specific jurisdiction exists." Domtar, 533 N.W.2d at 31. VIAD maintains that the district court has both specific and general personal jurisdiction over McCormick. We address VIAD's arguments as to each type of personal jurisdiction in turn.
A.
In order to establish a prima facie case of specific personal jurisdiction over McCormick, VIAD must show that the contracts between VIAD and McCormick had a substantial connection with Minnesota. Dent-Air, Inc. v. Beech Mountain Air Serv., Inc., 332 N.W.2d 904, 906-07 (Minn. 1983). VIAD argues that, even though it initiated the communications regarding the contracts at issue here, McCormick's subsequent actions regarding the contracts were sufficient for Minnesota courts to exercise specific personal jurisdiction over McCormick. The record does not support this contention.
Neither the negotiation of the contracts nor the performance pursuant to them was connected to Minnesota. During the negotiation, representatives from McCormick sent correspondence to VIAD and had telephone conversations with VIAD employees in Minnesota. But McCormick's representatives did not travel to Minnesota to negotiate or sign the contract. The tent structure, which was the subject of the first contract, was manufactured in Canada by a Canadian company and shipped directly from Canada to Nebraska for the tradeshow. VIAD performed work under the two installation contracts in Nebraska and Illinois.
Because the circumstances of the negotiation and performance under the contracts between VIAD and McCormick had so little connection with Minnesota, specific personal jurisdiction over McCormick cannot be established here. Accordingly, the district court did not err by concluding that it lacked specific personal jurisdiction over McCormick.
B.
VIAD also argues that the district court has general personal jurisdiction over McCormick based on McCormick's contacts with Minnesota. General personal jurisdiction exists when a nonresident defendant performs acts "by which the defendant purposefully avails itself of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240 (1958). From these acts, a defendant can reasonably anticipate the possibility of being haled into the forum state's courts. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567 (1980).
Minnesota courts consider the following five factors to determine whether the exercise of general personal jurisdiction is proper: (1) the quantity of the contacts with the forum state, (2) the nature and quality of the contacts, (3) the source and connection of the cause of action with these contacts, (4) the interest of the state in providing a forum, and (5) the convenience of the parties. Vikse v. Flaby, 316 N.W.2d 276, 282 (Minn. 1982). The first three factors address the minimum contacts with the forum state; the last two address the reasonableness component of the due-process inquiry. Juelich v. Yamazaki Mazak Optonics Corp., 682 N.W.2d 565, 570 (Minn. 2004).
1.
VIAD argues that McCormick's contacts with Minnesota were sufficient to confer general personal jurisdiction. For this factor, we consider "whether [McCormick's] incursions into the state were casual and sporadic, or whether they evinced an intent to do business on a regular and systematic basis here." Hardrives, 307 Minn. at 295, 240 N.W.2d at 817. Those contacts must have been "numerous and fairly frequent or regular in occurrence" in order to support the exercise of jurisdiction. Id.
The facts do not support a finding that McCormick solicited or conducted business in Minnesota on a continuous and systematic basis for the purpose of general personal jurisdiction. McCormick is a privately-held Iowa corporation with principal offices in Pella, Iowa. McCormick does not have a corporate office, employees, a registered agent, or property in Minnesota. McCormick is not registered with the secretary of state to do business in Minnesota, nor does it file Minnesota tax returns.
McCormick has ten authorized dealer locations in Minnesota. But McCormick does not keep any inventory in Minnesota; rather, it sells its products directly to its authorized dealers. An estimated $3.5 million of sales in Minnesota account for less than one percent of McCormick's total sales volume.
Sales to the State of Minnesota are a portion of McCormick's sales in the state. On December 10, 2003, and February 4, 2005, McCormick replied to the state's request for bid for the purchase of tractors. As a result, McCormick was awarded two contracts — the first covering the period of January 28 to November 30, 2004, and the second covering the period of March 17, 2005, to January 31, 2006.
VIAD argues that, by submitting these bids to the state, McCormick actively solicited business in Minnesota. But these sales to the state are included in the $3.5 million of Minnesota sales. We decline to treat sales to the state differently from the other sales that taken together constitute less than one percent of McCormick's total sales. VIAD has not established that either the dollar or percentage value of these sales represents continuous and systematic contact with Minnesota.
Citing an unpublished federal district court decision, VIAD argues that such sales figures would be sufficient to establish minimum contacts in the instant case. 3M Innovative Props. Co. v. InFocus Corp., No. CIV 04-0009 JNE/JGL, 2005 WL 361494 (D. Minn. Feb. 9, 2005). We note that unpublished opinions lack precedential value. Minn. Stat. § 480A.08, subd. 3(c) (2004); Dynamic Air, Inc. v. Bloch, 502 N.W.2d 796, 800-01 (Minn.App. 1993) (addressing dangers of miscitation and unfairness associated with use of unpublished opinions and stating that "[t]he legislature has unequivocally provided that unpublished opinions are not precedential"). Moreover, the facts of the case cited are distinguishable as the record here does not establish a comparable level of contacts that, in conjunction with less than one percent of total sales volume, constitute a continuous and systematic intent to do business in Minnesota.
VIAD also argues that McCormick's website is sufficiently interactive to contribute to a finding of general personal jurisdiction. Indeed, under certain circumstances, a forum state may exert general personal jurisdiction over a defendant based on an interactive website. Lakin v. Prudential Secs., Inc., 348 F.3d 704, 710-11 (8th Cir. 2003). Courts use the so-called Zippo-test to determine if the level of interactivity of a website is sufficient to confer general personal jurisdiction:
At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet Web site which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. In these cases, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site.
Id. (emphasis added) (quoting Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997).
McCormick's website is interactive in that it allows a user to enter a Zip Code to find nearby McCormick dealerships. But the website does not permit users to purchase products online or to enter into contracts with McCormick. Rather, all sales-related inquiries are directed to the local authorized dealers. Thus, although the website has some interactivity, the commercial nature of that interactivity as it relates to McCormick is minimal.
The record establishes that McCormick has some contacts with Minnesota. But those contacts are not sufficiently "continuous and systematic" to weigh in favor of exercising general personal jurisdiction over McCormick.
2.
We next consider whether the nature and quality of McCormick's contacts with the forum state established that McCormick purposefully availed itself of the privilege of conducting activities here, including the benefits and protections of Minnesota law. Dent- Air, 332 N.W.2d at 907. "When a defendant deliberately engages in significant activities in a state or creates continuing obligations between itself and residents of the state, the defendant `purposefully avails' itself of the protections of the law, as required to support the exercise of personal jurisdiction under the Due Process Clause." Marshall v. Inn on Madeline Island, 610 N.W.2d 670, 675-76 (Minn.App. 2000).
Here, the nature of the contacts weighs against exercising general personal jurisdiction over McCormick in a Minnesota court. A VIAD representative initiated the contact that led to the contracts at issue here, and VIAD representatives traveled to Iowa to negotiate the deal. McCormick's representative signed the contracts in Iowa and subsequently faxed them to VIAD in Minnesota. The tent structure, which is the subject of the first contract, was manufactured in Canada by a Canadian company and shipped directly to the Nebraska tradeshow. The obligations under the second and third contracts relate to VIAD's installation of the tent structure in Nebraska and Illinois.
Even when combined with McCormick's other contacts with Minnesota, the nature and quality of these activities are not significant enough to create the continuing obligations that would signal McCormick's purposeful availment of a Minnesota forum and its laws. Thus, this factor also weighs against exercising general personal jurisdiction over McCormick.
3.
The third factor is the source and connection of the cause of action with the contacts. "[I]n contract cases, the contract must have a substantial connection with the state." Dent-Air, 332 N.W.2d at 907. Here, the cause of action arises from the contracts between VIAD and McCormick, which were signed in Iowa for performance in Canada, Nebraska, and Illinois. VIAD's presence in Minnesota is insufficient on its own to create a connection between McCormick and the breach-of-contract action at issue here.
VIAD argues that Viking Engineering Devevlopment, Inc. v. R.S.B. Enterprises., Inc., 608 N.W.2d 166 (Minn.App. 2000), review denied (Minn. May 23, 2000), supports its argument that McCormick had substantial contacts with Minnesota related to the contract between the parties. In Viking Engineering, we held that, even though the purchaser initiated the contact with the manufacturer, the manufacturer purposefully directed its activities to Minnesota, thereby making general personal jurisdiction proper. 608 N.W.2d at 169-70. But in Viking Engineering, the manufacturer who sought to avoid general personal jurisdiction had more extensive contacts with Minnesota than McCormick. The contacts in that case included "phone calls, mail, and faxes to Minnesota to promote the sale of [the manufacturers'] machines and technology rights. . . ." Id. at 170 (emphasis added). Here, the record does not establish that McCormick has made similar efforts to promote its products within Minnesota. Accordingly, this factor does not weigh in favor of establishing general personal jurisdiction over McCormick.
4.
VIAD next argues that Minnesota has a strong interest in providing a forum for this litigation, and, therefore, this factor should weigh in its favor. Indeed, Minnesota has an interest in providing a forum for resident corporations that have been wronged, but such an interest is not a substitute for the minimum contacts necessary to establish general personal jurisdiction. Schuck v. Champs Food Sys., Ltd., 424 N.W.2d 567, 571 (Minn.App. 1988). VIAD has not established that McCormick had the constitutionally required minimum contacts with the forum state. Accordingly, this factor does not weigh in favor of exercising general personal jurisdiction over McCormick.
5.
"[W]henever minimum contacts are present[,] jurisdiction should be exercised unless the court finds that Minnesota jurisdiction is improper on forum non conveniens grounds." Dent-Air, 332 N.W.2d at 909. The district court concluded that it did not need to reach this factor because it had already determined that there were insufficient minimum contacts to satisfy the constitutional requirements to exercise personal jurisdiction over McCormick. See, e.g., id. ("We need not reach this consideration in the case at bar because we hold that minimum contacts sufficient to satisfy constitutional requirements for the exercise of personal jurisdiction are not present.")
VIAD argues that Minnesota is a convenient location because the "evidence and most of the witnesses, such as experts, are located in Minnesota." Because minimum contacts are not present, the convenience of the parties is not a dispositive factor in determining whether exercising general personal jurisdiction over McCormick is proper.
Because VIAD failed to establish a prima facie case that McCormick had continuous and systematic contacts with Minnesota such that the exercise of general personal jurisdiction would be proper, the district court correctly granted McCormick's motion to dismiss for lack of general personal jurisdiction.
II.
VIAD also contends that the district court erred by declining to order additional jurisdictional discovery. "[T]he trial judge has wide discretion to issue discovery orders and, absent clear abuse of that discretion, normally its order with respect thereto will not be disturbed." Shetka v. Kueppers, Kueppers, Von Feldt Salmen, 454 N.W.2d 916, 921 (Minn. 1990). The same broad discretion rests with the district court when determining whether to grant jurisdictional discovery. Behm v. John Nuveen Co., Inc., 555 N.W.2d 301, 305 (Minn.App. 1996).
Although jurisdictional discovery generally is permitted before a district court rules on a motion to dismiss for lack of personal jurisdiction, such discovery is not mandatory. Id. Moreover, such discovery is unnecessary when it is unlikely to lead to facts establishing jurisdiction. Id. As the Behm court reasoned under similar circumstances, it is evident from the district court's decision and our examination of the record that the district court examined the filed materials and concluded that supplementation of the record would have been unproductive. Id.
Although the district court's order refers to areas in which the record could be further developed, the district court was able to conclude from the existing facts that personal jurisdiction did not exist. VIAD did not make a formal motion for jurisdictional discovery or a proffer of what it expected additional discovery to produce. Based on the record before us, we cannot conclude that the district court's decision to proceed on the evidentiary record as presented by the parties was an abuse of discretion.