Opinion
No. C98-0106
May 6, 1999.
ORDER
This matter comes before the court pursuant to defendant Bandwagon's January 11, 1999 motion to dismiss for lack of personal jurisdiction (docket number 11). The parties have consented to the exercise of jurisdiction by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). For the reasons set forth below, Bandwagon's motion to dismiss for lack of personal jurisdiction is granted.
Bandwagon claims that plaintiff's claim against it should be dismissed for lack of personal jurisdiction because it has no business presence in Iowa, and it has not directed any business activities toward anyone in Iowa. Plaintiff argues that personal jurisdiction properly exists over Bandwagon because it sold the product at issue to defendant Miles Kimball Company, and Bandwagon knew or should have known that Miles Kimball has an established distribution channel into the state of Iowa. Plaintiff also contends that personal jurisdiction exists over Bandwagon because the effects of the alleged tort were felt by an Iowa resident.
Statement of Facts
The plaintiff in this case, Doris Elaine Chaffee Park (Chaffee Park), claims that defendants Miles Kimball Company (Miles Kimball) and Bandwagon committed copyright infringement and engaged in unfair competition under Iowa and Federal law for selling plastic "Garden Gator" replicas of Chaffee Park's three-piece bronze and iron lawn sculpture known as the "Lawn Croc." Chaffee Park is an independent artist who sells limited edition, numbered "Lawn Croc" sculptures directly to her customers or through high-end mail-order catalogs.
Bandwagon purchased approximately 41,000 Garden Gators from an independent "molder," and resold them wholesale to Miles Kimball and others. No direct sales were made by Bandwagon in Iowa. Miles Kimball purchased 8,000 Garden Gators from Bandwagon and sold them retail through its well known mail-order catalog. Chaffee Park ordered two of the Garden Gators from Miles Kimball, which were shipped to her in Iowa.
CONCLUSIONS OF LAW Personal Jurisdiction Over Bandwagon
Bandwagon argues that the exercise of jurisdiction over it would violate due process. Bandwagon argues that it lacks "sufficient minimum contacts" with the state of Iowa and summoning it to defend itself in Iowa would offend "traditional notions of fair play and substantial justice" in violation of the due process clause of the Fourteenth Amendment. In support of its argument, Bandwagon emphasizes the following facts: (1) Bandwagon is a corporation of the Commonwealth of Massachusetts and has no subsidiaries or affiliated business entities in Iowa; (2) Bandwagon does not maintain any kind of physical presence whatsoever in Iowa; (3) no agent or employee of Bandwagon has ever visited the state of Iowa on its behalf; (4) Bandwagon has no interest in nor owns any real estate, bank accounts, or personal property in Iowa; (5) Bandwagon has never availed itself of the courts in Iowa; (6) during the last two years, only .01% of Bandwagon's total sales were made to customers in Iowa; (7) Bandwagon has never made any direct sales of the Garden Gator to an Iowa resident or entity; and (8) prior to the commencement of this litigation, Bandwagon had never heard of the plaintiff, nor did it intend to direct any of its actions toward plaintiff or any other Iowa resident or entity.
Chaffee Park argues that personal jurisdiction is proper in this case because Bandwagon knew or should have known that Miles Kimball had a well established distribution channel into Iowa when Bandwagon sold Miles Kimball the Garden Gators for resale. Chaffee Park also argues that the exercise of personal jurisdiction over Bandwagon is appropriate because the effects of their tortious acts were felt in Iowa by a resident of the state.
While the plaintiff bears the ultimate burden of proof on the issue of personal jurisdiction, jurisdiction need not be proved by a preponderance of the evidence until trial or until the court holds an evidentiary hearing. To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party need only make a prima facie showing of jurisdiction. If the district court does not hold a hearing and instead relies on pleadings and affidavits, the court must look at the facts in a light most favorable to the nonmoving party and resolve all factual conflicts in favor of that party. Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384 (8th Cir. 1991).
In determining whether a federal court has jurisdiction over a non-resident party, a two-step inquiry is utilized: "(1) whether the facts presented satisfy the forum state's long-arm statute, and (2) whether the nonresident has `minimum contacts' with the forum state, so that the court's exercise of jurisdiction would be fair and in accordance with due process." Soo Line R.R. Co. v. Hawker Siddeley Canada, Inc., 950 F.2d 526, 528 (8th Cir. 1991) (quoting Wines v. Lake Havasu Boat Mfg., 846 F.2d 40, 42 (8th Cir. 1988)). See also Dakota Indus., Inc. v. Best Ever Ltd., 28 F.3d 910, 915 (8th Cir. 1994) ("A federal court may assume jurisdiction over a foreign defendant only to the extent permitted by the forum state's long-arm statute and by the Due Process Clause of the Constitution."); Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 653 (8th Cir. 1982) (same). Personal jurisdiction in Iowa extends to the fullest extent permitted by the Constitution. Hicklin Eng'g, Inc. v. Aidco, Inc., 959 F.2d 738, 739 (8th Cir. 1992), (citing Newton Mfg. Co. v. Biogenetics, Ltd., 461 N.W.2d 472, 474 (Iowa Ct.App. 1990). Therefore, "the level inquiry collapses into one" and the court need only determine whether the defendant has sufficient minimum contacts to satisfy the Fourteenth Amendment. EFCO Corp. v. Aluma Sys., USA, Inc., 983 F. Supp. 816, 819 (S.D. Iowa 1997); Hicklin, 959 F.2d at 739.
"Due process mandates that jurisdiction be exercised only if defendant has sufficient `minimum contacts' with the forum state, such that summoning the defendant into the forum state would not offend `traditional notions of fair play and substantial justice.'" EFCO, supra, quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945). Defendant's contacts with the forum state must be more than random, fortuitous, or attenuated. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528 (1985). Sufficient minimum contacts exist when "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567, 62 L. Ed. 2d 490 (1980). "[I]t is essential in each case that there be some act by which the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 78 S. Ct. 1228, 1240 (1958).
Factors to consider in evaluating whether or not a nonresident's contacts with the forum state are sufficient to impose jurisdiction include: "(1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum state; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties." Soo Line R.R. Co., 950 F.2d at 529 (quoting Aaron Ferer Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir. 1977). See also Mountaire Feeds, Inc., 677 F.2d at 654 (same). However, the fourth and fifth factors are only `secondary factors' to be considered and are not determinative. Id.
Because Bandwagon has had virtually no contact with the state of Iowa in recent years, the nature, quality, and quantity of contacts under the first and second factors are small. As previously stated, Bandwagon did not sell any Garden Gators directly to customers in Iowa, Bandwagon is incorporated entirely within the state of Massachusetts, Bandwagon maintains no corporate presence whatsoever in Iowa, no Bandwagon agent or employee has ever visited Iowa for business purposes, Bandwagon has no interest in, use or possession of any real estate, bank accounts, or personal property in Iowa, Bandwagon has never availed itself of the courts in the state of Iowa, and during the last two years, Bandwagon's sales of other products to Iowa customers amounted to only .01% of its total sales. Furthermore, Bandwagon was unaware of Chaffee Park or her alleged copyright rights prior to the commencement of this lawsuit.
Plaintiff argues that Bandwagon's sale of the Garden Gators to Miles Kimball, who Bandwagon knew or should have known would resell them on a nationwide basis through its mail-order catalog provides "sufficient minimum contacts" and comports with due process under the "stream of commerce" theory. Chaffee Park also argues that "sufficient minimum contacts" were established under the "effects" test because the brunt of Bandwagon's tortious acts was felt in Iowa by an Iowa resident.
Stream of Commerce
The United States Supreme Court has evaluated whether the mere awareness on the part of a foreign defendant that the item it sold outside the forum state would reach the forum state via the "stream of commerce" satisfies the due process requirement of minimum contacts. Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102, 107 S. Ct. 1026 (1987). In Asahi, a Japanese tire valve manufacturer (Asahi) sold its valves to a tire manufacture in Taiwan. Id. The tire manufacturer incorporated the valves into its tires, which it sold worldwide, including California. Id. While Asahi was aware that tires containing its valves would end up in California, it never contemplated that the sale of its valves in Taiwan would subject it to the jurisdiction of the California courts in a product liability suit. Id. A plurality of the Court held that "the mere placement of a product into the stream of commerce, even if done with an awareness that the stream will sweep the product into the forum State absent additional conduct indicating an intent to serve the forum market," does not amount to an action purposely directed toward the forum state necessary to find sufficient minimum contacts. Id. at 103-104. In support of this holding, the plurality noted that Asahi did no business in California, had no office, agent, employees, or property in California, did not advertise or solicit business in California, and it did not create, control, or employ the distribution system that introduced its valves into the state. Id. at 112. Moreover, there was no evidence that Asahi designed its product to cater to California markets. Id. at 113.
The Eighth Circuit Court of Appeals has analyzed the "stream of commerce" theory in several cases. In one such case, an employee injured by a fireworks display brought suit in Nebraska against the Japan manufacturer of the fireworks (Hosoya). Barone v. Rich Bros. Interstate Display Fireworks, 25 F.3d 610 (8th Cir. 1994), cert denied, 513 U.S. 948, 115 S. Ct. 359 (1994). While the court initially noted that Hosoya maintained no office, agent, or distributer in Nebraska, and did not advertise or directly sell its products in Nebraska, it nonetheless held that Hosoya was subject to personal jurisdiction in the District of Nebraska pursuant to the stream of commerce analysis. Id. at 610-611. The fireworks at issue in Barone were manufactured by Hosoya and sold to Rich Bros., which is located in Sioux Falls, South Dakota, for distribution. Id. at 611. Rich Bros. sold the fireworks through six regional salesman, one of whom was located in Nebraska, and through a mail-order catalog. Id. Furthermore, the court was not convinced by Hosoya's contention that it had "no idea its products were being distributed into neighboring states" considering that it had intentionally "poured its products into regional distributors throughout the country." Id. at 615. "South Dakota is not a particularly populous state; Sioux Falls is conveniently located within short distance of three other states, and the very name of the distributor is `Rich Bros. Interstate Display Fireworks Co.'" Id. at 613 (emphasis in original).
The Eighth Circuit also evaluated the "stream of commerce" theory in Vandelune v. 4B Elevator Components Unlimited, 148 F.3d 943 (8th Cir. 1998), cert denied, 119 S. Ct. 543 (1998). In Vandelune, a British manufacturer, Synatel, designed a motion sensor to be used in grain elevators. Id. at 945. The sensor allegedly malfunctioned and a grain dust explosion resulted, injuring the plaintiff. Id. The explosion took place in Iowa when the plaintiff was a resident of the state. Id. Again, the court noted that Synatel maintained no business presence in the state of Iowa, and that Synatel neither advertised nor solicited business in Iowa. Id. at 948. However, the court found that Synatel had sufficient contacts with the state of Iowa to permit the exercise of personal jurisdiction. Id. at 944.
The product at issue in Vandelune was designed specially for and marketed at American grain elevators. Id. at 948. Moreover, the record revealed that Synatel shipped some of the sensors to Peoria, Illinois, which is approximately 80 miles from the Iowa border, and that some Synatel employees attended technical support meetings in Peoria. Id. Relying heavily upon its prior holding in Barone, the court noted that the absence of a direct marketing presence did not mean that Synatel had not purposefully marketed its product toward Iowa. Id.
The case presently before the court, however, is distinguishable from both Barone and Vandelune. Unlike the nonresident defendants in those cases, Bandwagon did not have a regional distributor selling its products in one of Iowa's neighboring states. Nor is there any evidence that Bandwagon knew that its Garden Gators were specifically suited to an Iowa market. See Harker's Wholesale Meats, Inc. v. Framarx Corp., 79 F.R.D. 715, 717-718 (N.D. Iowa 1978) (finding sufficient minimum contacts to satisfy due process by allegation that nonresident defendant had knowledge of the purpose for which the product at issue would be used by Iowa customers, agent of nonresident defendant visited Iowa plant when problems arose with the product, and sold the product to an Illinois company, Iowa's geographical neighbor).
Unlike motion sensors for grain elevators, which are designed to be used in agricultural states such as Iowa, Garden Gators can be displayed anywhere. Moreover, Bandwagon sold its Garden Gators to Miles Kimball F.O.B. Massachusetts, and title to the Garden Gators passed in the state of Massachusetts as well. See Digi-Tel Holdings v. Proteq Telecomm., Ltd., 89 F.3d 519, 525 (8th Cir. 1996) (fact that delivery and transfer of ownership of product at issue took place in a foreign country weighed against a finding of personal jurisdiction); Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 820 (8th Cir. 1994) (noting that delivery terms, while not determinative, are relevant to finding of personal jurisdiction). Bandwagon did not use regional salespeople to ensure that its product would be marketed and sold in Iowa. Nor does the record reflect that any employee or agent of Bandwagon every visited Iowa or any state near Iowa in an effort to promote its Garden Gators. Unlike the nonresident defendants in Barone and Vandelune, Bandwagon did not "`pour its products' into a regional distributor with the expectation that the distributor will penetrate a discrete, multi-State trade area." Vandelune, 148 F.3d at 948 (quoting Barone, 25 F.3d at 615).
The case presently before the court is factually similar to a recent Eighth Circuit in which the court found that a Jamaican brewer of beers lacked sufficient minimum contacts with the state of Minnesota to be subject to personal jurisdiction there. Guinness Import Co. v. Mark VII Distribs., Inc., 153 F.3d 607, 615 (8th Cir. 1998). In Guinness, the Jamaican brewer dealt with three American importers to import its beer into the states. Id. at 610. The importers then contracted with distributors of their choosing in order to distribute the beer. Id. When a new importer opted not to do business with a current distributor, that distributor sued the importer and asserted a third-party action against the brewer. Id. The distributor argued that personal jurisdiction in Minnesota comported with due process via the "stream of commerce" theory because when the brewer "sold its beer for distribution in America, it must have known and intended that the beer would find its way to Minnesota." Id. at 615. The court disagreed, noting that title to the beer passed in Jamaica, that the importer selected its American distributors and transferred the beer to them, the brewer exercised no control over the beer or an of the actors involved once the beer left Jamaica. Id. "Simply put, DG [the brewer] did not purposely direct its activities at Mark VII [the distributor] or any other Minnesota beer distributor, and in this commercial context such a showing is necessary for the Due Process Clause to be satisfied." Id.
Once Bandwagon sold its Garden Gators to Miles Kimball in Massachusetts, it retained no control over the items or their eventual destinations. Even assuming that Bandwagon was aware that Miles Kimball would offer the Garden Gators for sale on a nationwide basis, including Iowa, that knowledge or alone is not enough to satisfy due process. See Humble v. Toyota Motor Co., Ltd., 727 F.2d 709, 710 (8th Cir. 1984) (holding that Japanese car seat manufacturer was not subject to personal jurisdiction in Iowa despite fact that it could be reasonably foreseen that its product would end up in Iowa). Quoting the district court's order granting the manufacturer's motion to dismiss, the Eighth Circuit noted: "[t]he court does not doubt that Arakawa [the manufacturer] could have foreseen that its product would find its way into the United States and Iowa, however, it is doubtful that Arakawa could reasonably have anticipated being haled into court in Iowa." Id. Likewise, it cannot be said that Bandwagon could have reasonably anticipated being haled into an Iowa court based upon its sale of the Garden Gators to Miles Kimball in Massachusetts.
Effects Test
Chaffee Park claims that personal jurisdiction satisfies due process because the effect of Bandwagon's allegedly tortious conduct was felt by an Iowa resident. Bandwagon argues that the effects test does not work to extend personal jurisdiction in this case because none of its actions were intentionally directed at Iowa or at Chaffee Park. The court agrees with Bandwagon.
The United States Supreme Court analyzed the "effects" test and found that the absence of actual contacts with the forum state will not defeat personal jurisdiction when the nonresident defendant's intentional acts were calculated to cause injury to a person residing within the forum state. Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482 (1984). At issue in Calder was a disparaging magazine article published in the National Enquirer about the entertainer Shirley Jones, who lived and worked in California. Id. The National Enquirer is a Florida corporation with its principal place of business in Florida and the authors of the article were Florida residents with limited contacts with the state of California. Id. at 786. Despite the lack of contacts with California, the court held that jurisdiction was proper there as California was the intended focal point of the story and where the harm was suffered. Id. at 789. Under these circumstances, the nonresident defendants must have reasonably anticipated being haled into a California court. Id. at 790.
"Two conditions must be met for the Calder effects test to apply. First, the defendant's acts must be intentional and not merely negligent. Second, the `focal point' of the act, i.e., where the 'brunt' of the harm is intended, must be within the chosen forum." EFCO, 983 F. Supp. at 821 (quoting Dakota Indus., 946 F.2d at 1390. Chaffee Park has failed to make the requisite showing that Bandwagon's actions of selling the Garden Gators to Miles Kimball in Massachusetts was aimed at Iowa or anyone residing in the state. Affidavits supplied by Bandwagon indicate that it had never heard of Chaffee Park or her alleged copyright rights prior to receiving the complaint in this action. Moreover, the affidavit of Arthur Hovey, president of Bandwagon, states that Bandwagon never intended any of its actions to be directed toward the plaintiff or the state of Iowa. Therefore, exercising personal jurisdiction based solely upon the fact that the effects of an alleged tortious act were felt in Iowa, without any showing of intent to inflict harm to someone in Iowa, violates due process.
Upon the foregoing,
IT IS ORDERED
Defendant Bandwagon's motion to dismiss for lack of personal jurisdiction (docket number 11) is granted.