STEVENSON v. BIG HORN CO-OP MARKETING ASSOC

LARRY BOYLE, Magistrate Judge

Currently pending before the Court are Defendant's 12(b) Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue (Docket No. 7), Defendant's Motion to Stay Discovery and Motion to Vacate Trial (Docket No. 25), and Defendant's Motion for Protective Order (Docket No. 26).

Having carefully reviewed the record, considered oral arguments, and otherwise being fully advised, the Court enters the following Order, Report and Recommendation pursuant to 28 U.S.C. § 636(b).

I. BACKGROUND

On February 28, 2001, Plaintiffs William K. Stevenson and his wife, Lisa Stevenson, commenced the instant action on both their behalf and on behalf of their three (3) children against Big Horn Co-Operative Marketing Association ("Big Horn"), asserting personal injury claims and damages. In their Complaint, Plaintiffs allege that on August 26, 1999, Big Horn employees, while working within the scope of their employment with Big Horn, acted negligently resulting in William Stevenson's injuries.

On May 15, 2001, Defendant Big Horn filed a Motion to Dismiss for lack of personal jurisdiction and improper venue (Docket No. 7). On June 15, 2001, Plaintiffs filed a Motion to Amend their Complaint, which was granted by the District Court on July 2, 2001. (Docket No. 19). On July 31, 2001, Defendant filed a Motion to Stay Discovery and a Motion for Protective Order (Docket Nos. 25 26).

Plaintiffs' Amended Complaint alleges more facts in support of the issue of jurisdiction and venue; no additional causes of action are plead. (Docket No. 21).

II. ANALYSIS

A. Standard for Rule 12(b)(2) Motion to Dismiss for Lack of Jurisdiction

The plaintiff has the burden of establishing that the court has personal jurisdiction. Rano v. Sipa Press, Inc., 987 F.2d 580, 585 (9th Cir. 1993). Yet, the quantum of proof required for the plaintiff to meet this burden varies, depending on the type of evidence the trial court allows the parties to present and the nature of the proceeding conducted to rule on the motion. Data Disc v. Systems Tech. Assocs., 557 F.2d 1280, 1285 (9th Cir. 1977). Where the trial court decides the matter without an evidentiary hearing, the plaintiff need only establish a prima facie showing of proper jurisdiction to overcome the motion to dismiss. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995); Data Disc, 557 F.2d at 1285. Thus, "the plaintiff need only demonstrate facts that if true would support jurisdiction over the defendant." Ballard, 65 F.3d at 1498 (citing Data Disc, 557 F.2d at 1285).

In the instant action, the Court has proceeded without an evidentiary hearing. Therefore, Plaintiffs need only establish a prima facie case, and the Court must treat Plaintiffs' "allegations as true." Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). Where affidavits contain conflicting assertions, the Court cannot "`weigh' the affidavits in order to resolve disputed issues." Data Disc, 557 F.2d at 1284. A prima facie showing does not finally adjudicate the personal jurisdiction issue, but leaves it open for resolution at some later time after discovery has been done. Rano, 987 F.2d at 587 n. 3.

B. Personal Jurisdiction

Defendant seeks dismissal of the instant action on the basis that this Court lacks personal jurisdiction over it. Defendant is a Wyoming corporation with its principal place of business in Wyoming. Plaintiffs are Idaho residents who filed the instant action on the basis of diversity jurisdiction.

Defendant is an agri-business cooperative which purchased a piece of equipment known as a rogator from Ag-Chem Equipment Company, Inc. ("Ag-Chem"), a Minnesota based company. After purchasing the rogator, it, along with the accompanying boom, was shipped to Defendant's Wyoming facility from Jackson, Minnesota. The purchase contract with Ag-Chem provides, as between the buyer and seller of the equipment, that the State of Minnesota shall have jurisdiction over any disputes in connection with the purchase of the rogator, and that venue is proper in Minnesota. Affidavit of Louis Pistulka Ex. B.

Subsequent to purchase of the rogator by Defendant from Ag-Chem, Defendant began experiencing problems with the boom. According to Defendant, it telephoned Ag-Chem by calling its toll-free 1-800 telephone number and requested that the boom be repaired pursuant to Ag-Chem's warranty. Ag-Chem sent Plaintiff William Stevenson to Defendant's Wyoming facility to perform a new delivery inspection of the equipment. After the inspection, Plaintiffs assert that Defendant telephoned William Stevenson on several occasions in 1998 and 1999, resulting in his making trips from Idaho to Defendant's Wyoming facility to inspect or repair the rogator in July and August 1998, and February and July 1999.

Defendant eventually requested that the boom be replaced. There is a dispute between the parties as to whether this request was made by Defendant directly to William Stevenson, or whether the request was made by Defendant to another Ag-Chem representative who in turn telephoned William Stevenson.

On August 26, 1999, William Stevenson delivered the replacement equipment to Defendant's Wyoming facility, during which time the accident occurred when the boom was dropped on his left foot. Plaintiffs assert that Defendant's employees were negligent in moving the boom, which negligence resulted in the boom being dropped on William Stevenson's left foot.

To assert personal jurisdiction over a non-resident defendant, this Court must determine: (1) whether Defendant's conduct complies with the requirements of Idaho's long-arm statute, I.C. § 5-514; and (2) whether jurisdiction can be exercised consistent with the Due Process Clause. See, e.g., Haisten v. Grass Valley Med. Reimbursement Fund, 784 F.2d 1392, 1396 (9th Cir. 1986).

Idaho's long-arm statute, § 5-514 of the Idaho Code, provides, in relevant part, that:

Any . . . company, association or corporation . . . submits . . . to the jurisdiction of the courts of this state as to any cause of action arising from the doing of any of [the following] acts:

(a) The transaction of any business within this state which is hereby defined as the doing of any act for the purpose of realizing pecuniary benefit or accomplishing or attempting to accomplish, transact or enhance the business purpose or objective or any part thereof of such person, firm, company, association or corporation;

(b) The commission of a tortious act within this State. . . .

Recent Idaho Supreme Court decisions have indicated that fulfillment of the first factor does not necessarily assure compliance with the second; thus, the Idaho Supreme Court appears to imply that I.C. § 5-514 reaches beyond the limits of the Due Process Clause. See Smalley v. Kaiser, 130 Idaho 909, 950 P.2d 1248 (1997); St. Alphonsus v. State of Washington, 123 Idaho 739, 852 P.2d 491 (1993); see also Lake v. Lake, 817 F.2d 1416, 1420 (9th Cir. 1987) ("The Idaho legislature, in adopting [the long-arm] statute, intended to exercise all the jurisdiction available to the State of Idaho under the due process clause of the United States Constitution."). However, if due process considerations are met, the over-reaching long-arm statute would also be satisfied. Thus, to satisfy jurisdictional concerns, Plaintiffs must show that Defendant has certain minimum contacts with Idaho so that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

i. General Jurisdiction

Courts may satisfy the standard by exercising either general or specific jurisdiction over non-resident defendants. Bancroft Masters, Inc. v. Augusta Nat'l, Inc., 223 F.3d 1082 (9th Cir. 2000). General jurisdiction exists where the non-resident defendant has "substantial" or "continuous and systematic" contacts with the forum state. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414 (1984); see also Fields v. Sedgwick Associated Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986). A court exercising general jurisdiction over a defendant may hear cases unrelated to the defendant's forum-related activities. Fields, 796 F.2d at 301.

The Ninth Circuit has recognized that "the level of contact with the forum state necessary to establish general jurisdiction is quite high." Shute v. Carnival Cruise Lines, 897 F.2d 377, 380, rev'd on other grounds, 499 U.S. 585 (1991). Factors to be taken into consideration in determining general jurisdiction are whether "the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there." Bancroft Masters, 223 F.3d at 1086 (citing Hirsch v. Blue Cross, Blue Shield of Kansas City, 800 F.2d 1474, 1478 (9th Cir. 1986)).

In the instant action, Plaintiffs contend that general jurisdiction exists because Defendant has continuously and systematically transacted business with Idaho entities in excess of $702,000 between April 1996 and April 2001 for purchase and shipping of goods and products not related in any manner to the events in dispute here.

In the Court's view, however, Defendant's actions in making these purchases were not "substantial" enough or "continuous and systematic" enough to warrant general jurisdiction. According to the record, Defendant does not sell anything in Idaho, does not solicit business in Idaho, does not advertise in Idaho, does not have employees outside of Wyoming, and does not own property outside of Wyoming. Pistulka Depo. pp. 14-15, 18, 28-29, 34. Defendant's purchases from various Idaho businesses do not subject Defendant to the general jurisdiction of this Court. Affidavit of David Cannon Ex. C. As the U.S. Supreme Court noted in Helicopteros Nacionales de Colombia:

[M]ere purchases, even if occurring at regular intervals, are not enough to warrant a State's assertion of in personam jurisdiction over a non-resident corporation in a cause of action not related to those purchase transactions.

466 U.S. at 418.

In the instant action, the Court concludes that Plaintiffs have not established a prima facie case that Defendant's business activities within Idaho were more than "mere purchases." Therefore, this Court's jurisdiction over Defendant, if any, is limited to specific jurisdiction. Shute, 897 F.2d at 381.

ii. Specific Jurisdiction

Defendant argues that the instant action should be dismissed because it has never purposefully availed itself to the privileges or protection of Idaho law. Defendant asserts that its only contact with Idaho was with William Stevenson, which occurred only as the result of Ag-Chem's unilateral conduct in appointing Stevenson to be the Ag-Chem representative to assist Defendant with the problems it was experiencing with the equipment.

The Ninth Circuit has devised a three-part test to determine whether the exercise of specific jurisdiction comports with due process:

(1) [T]he nonresident defendant must purposefully direct his activities or consummate some transaction with the forum or residents thereof; or perform some act by which he purposefully avails himself of the privilege of conducting activities in the forum, thereby invoking the benefits and protections of its laws; (2) the claim must be one which arises out of or relates to the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable.

Lake, 817 F.2d at 1421 (citing Haisten, 784 F.2d at 1397).

The law is well established that Defendant may not be brought into court in Idaho because of random, fortuitous or attenuated contacts, or contacts based upon the unilateral activities of Plaintiff or some third parties. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). The requirement of "purposeful availment" is based on the presumption that it is reasonable to require a defendant who conducts business and benefits from his activities in a state to be subject to the burden of litigating in that state as well. Id. at 476; Lake, 817 F.2d at 1421.

The Ninth Circuit has held that a district court should "apply different purposeful availment tests to contract and tort cases." Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir. 1995) (citing Core-Vent Corp. v. Nobel Indus., 11 F.3d 1482, 1486 (9th Cir. 1993); Roth v. Garcia Marquez, 942 F.2d 617, 621 (9th Cir. 1991)). "Consistent with the Supreme Court's holding in Burger King, merely contracting with a resident of the forum state is insufficient to confer specific jurisdiction over a nonresident." Id. In tort cases, however, the Ninth Circuit has held that courts should apply the "effects" test and that "jurisdiction may attach if an out-of-forum defendant merely engages in conduct aimed at, and having effect in, the situs state." Id.; Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1321 (9th Cir. 1998) (stating that in tort cases, purposeful availment may be established if "the defendant's conduct is aimed at or has an effect in the forum state"). To meet the "effects" test, the defendant must have:

(1) [C]ommitted an intentional act, which was (2) expressly aimed at the forum state, and (3) caused harm, the brunt of which is suffered and which the defendant knows is likely to be suffered in the forum state.

Bancroft Masters, 223 F.3d at 1087.

In the instant action, the Court concludes that Defendant has not conducted business with Idaho for purposes of determining specific jurisdiction. According to the record, it was Ag-Chem, not Defendant, that selected William Stevenson to go to Defendant's facility in Wyoming for the initial inspection and the subsequent replacement of the boom. Zier Aff. ¶¶ 8, 13. There is no evidence in the record, and Plaintiffs have not argued, that there was a contract or other relationship between William Stevenson and Defendant. Thus, because there was no transaction consummated between William Stevenson and Defendant, Plaintiffs must make a prima facie showing that Defendant purposefully directed its activities to William Stevenson. Lake, 817 F.2d at 1421.

According to the record, several phone calls were made by Ted Zier, Defendant's manager at the time in question, to William Stevenson in Idaho between 1998 and 1999. Stevenson Aff. ¶¶ 8-11, 15, 29; Zier Depo. p. 20. As a result of these phone calls, William Stevenson averred that he made trips to Wyoming to inspect or work on the rogator. Id. ¶¶ 9-10, 13, 16. The record also establishes that Defendant knew that William Stevenson was a resident of Idaho. Zier Depo. p. 18.

Under the "effects" test, a defendant may be subject to personal jurisdiction if he "intentionally directed his activities into the forum." Brainerd v. Governors of the Univ. of Alberta, 873 F.2d 1257, 1259 (9th Cir. 1989) (citing Calder v. Jones, 465 U.S. 783, 789-90 (1984)). Further, the Ninth Circuit has concluded that when a "defendant is alleged to have engaged in wrongful conduct targeted at a plaintiff whom the defendant knows to be a resident of the forum state" the "express aiming" element of the "effects test" is satisfied. Bancroft Masters, 223 F.3d at 1087.

After considering applicable case law, the Court concludes that Plaintiffs have not made a prima facie case that Defendant committed an intentional act directed into Idaho or at William Stevenson for purposes of creating personal jurisdiction in Idaho. Further, Plaintiff has alleged only negligent, and not intentional, conduct by Defendant. Amended Complaint ¶ VIII. Thus, although Defendant may have known that William Stevenson was an Idaho resident and may have had several phone conversations with him, the Court concludes that Defendant's alleged negligence is not the type of act contemplated by controlling case authority. Rather, the Ninth Circuit has typically utilized the "effects" test in the context of intentional torts. See, e.g, Bancroft Masters, 223 F.3d 1082 (applying the "effects" test in a trademark dilution suit); Brainerd, 873 F.2d 1257 (applying the "effects" test in a defamation suit). Thus, the Court concludes that Plaintiffs have failed to satisfy the first element of the effects test. Bancroft Masters, 223 F.3d at 1087.

Further, the Court concludes that Plaintiffs have not properly established that Defendant's conduct was expressly aimed at William Stevenson as contemplated by controlling law. As made clear by the court in Bancroft Masters, to expressly aim conduct at a forum resident, Defendant must be engaged in "wrongful conduct." 223 F.3d at 1087. In the instant action, the only conduct that Defendant is alleged to have engaged in with William Stevenson are phone calls requesting equipment service or replacement. While the acts of placing telephone calls to Idaho were intentional, those calls were not wrongful or intentional acts as contemplated by controlling case law. The Ninth Circuit Court in Bancroft Masters recognized that specific jurisdiction will not arise just because a foreign act has foreseeable effects in the forum state. Id. Thus, since Plaintiffs have failed to make a prima facie showing that Defendant's conduct with William Stevenson in Idaho was "wrongful," this Court does not have jurisdiction over Defendant in this action. Consequently, the Court concludes that venue in this District would also be improper.

C. Transfer

Although the Court concludes that it lacks jurisdiction over Defendant, it has discretion to transfer the instant action. Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467 (1962). Pursuant to 28 U.S.C. § 1406(a):

The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

In determining whether the laws of the transferor or the transferee state apply to an action transferred for lack of personal jurisdiction, the Ninth Circuit has determined that the laws of the transferee state should apply. Nelson v. Int'l Paint Co., 716 F.2d 640, 643(9th Cir. 1983).

In the instant action, the Court concludes that in the interests of justice, the case should be transferred to the United States Court for the District of Wyoming. According to Wyoming law, the law of the transferee state, Plaintiffs have four years in which to bring an action for personal injury. Wyo. Stat. § 1-3-105. Thus, Plaintiffs are not barred from pursuing this action in Wyoming. Therefore, the Court concludes that the parties would not be prejudiced by transferring the action.

III. ORDER

Based on the foregoing, IT IS HEREBY ORDERED that Defendant's Motion to Stay Discovery and Motion to Vacate Trial (Docket No. 25) and Defendant's Motion for Protective Order (Docket No. 26) are MOOT.

IV. RECOMMENDATION

Based upon the foregoing, this Court recommends the District Court enter an order GRANTING Defendant's 12(b) Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue (Docket No. 7). Further, the Court recommends that the instant action be transferred to the District of Wyoming.

Written objections to this Report and Recommendation must be filed within ten (10) days pursuant to 28 U.S.C. § 636(b)(1) and Local Rule 72.1(b)(2) or as a result that party may waive the right to raise factual and/or legal objections in the Ninth Circuit Court of Appeals.