Opinion
No. 00-CV-1034-B
November 30, 2000
ORDER
This is a cause of action seeking damages for numerous claims, including breach of employment contract and wrongful discharge. Now before the Court is Defendant 3Com Corporation's Motion to Dismiss for Lack of In Personam Jurisdiction. After reading the briefs, hearing oral arguments, and being fully advised in the premises, the Court FINDS and ORDERS as follows:
Statement of the Parties
plaintiff Kent R. Holiday ("Mr. Holiday") is a resident of the State of Wyoming, and a former employee of the Defendant. Defendant 3Com Corporation ("3Com") is a Delaware corporation with its principle place of business in California.
Background
Plaintiff was hired by a company called Megahertz in 1994. Megahertz merged with U.S. Robotics in 1995, and Mr. Holiday continued his employment with the new company. In 1997, Plaintiff was assigned as a business representative of U.S. Robotics for the Republic of South Korea. Shortly thereafter, U.S. Robotics merged with Defendant 3Com. 3Com introduced a post-merger salary restructuring program called "job levelling" to address the disparity in pay levels between employees of the newly merged companies. Plaintiff alleges that he was to receive a pay increase as a result and that his supervisors represented to him that the pay increases would apply retroactively. Plaintiff further alleges that he was paid substantially less than the amount agreed upon by the parties.
During Plaintiff's term of employment in Korea, 3Com paid Plaintiff's salary by direct deposit to a First Interstate (now Wells Fargo) bank account set up in Wyoming. Defendant also has contact with Wyoming through operation of a site on the World Wide Web (http://www.3Com.com). This site contains a company profile, describes 3Com's products, service and support, lists select 3Com customers (including the Wyoming Department of Education), and allows customers to purchase products through the site.
Standard of Review
Where a court's in personam jurisdiction is challenged,
[t]he plaintiff bears the burden of establishing personal jurisdiction over the defendant. Prior to trial, however, when a motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written materials, the plaintiff need only make a prima facie showing. The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits. If the parties present conflicting affidavits, all factual disputes are resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party.Behagen v. Amateur Basketball Ass'n, 744 F.2d 731, 733 (10th Cir. 1984) (citations omitted).
To establish personal jurisdiction, a plaintiff must show both that jurisdiction is proper under the forum state's long-arm statute and that exercise of personal jurisdiction over the defendant comports with the Due Process Clause of the United States Constitution. See Equifax Servs., Inc. v. Hit, 905 F.2d 1355, 1357 (10th Cir. 1990). Wyoming's long-arm statute provides that "[a] Wyoming court may exercise jurisdiction on any basis not inconsistent with the Wyoming or United States constitution." Wyo. Stat. § 5-1-107(a) (1999). Thus, in Wyoming, "this two part inquiry collapses into a single due process analysis." Rambo v. American S. Ins. Co., 839 F.2d 1415, 1416 (10th Cir. 1988) (applying Oklahoma's similar long-arm statute); see also Dobbs v. Chevron U.S.A., Inc., 39 F.3d 1064, 1067-68 (10th Cir. 1994) (recognizing that the limits of Wyoming's long arm statute are coextensive with federal due process requirements).
"The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful `contacts, ties, or relations.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (quoting Int'l Shoe v. Washington, 326 U.S. 310, 319 (1945)). To stay within due process limitations, a forum has personal jurisdiction only over those defendants that have "certain minimum contacts (with the jurisdiction) . . . such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Int'l Shoe, 326 U.S. at 316 (quotingMilliken v. Meyer, 311 U.S. 457, 463 (1940)).
The "minimum contacts" necessary for personal jurisdiction can be shown either through specific jurisdiction, where (1) the defendant purposefully directed activities at forum residents and (2) litigation results from injuries arising from those activities; or general jurisdiction, where the defendant's general business contacts with the forum state are sufficiently "continuous and systematic." Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 455 (10th Cir. 1996)
If a plaintiff makes a prima facie showing that "minimum contacts" exist, the defendant can defeat the exercise of personal jurisdiction by demonstrating that it is incompatible with "traditional notions of fair play and substantial justice" — a reasonableness inquiry conducted in light of the circumstances surrounding the case. OMI Holdings, Inc. v. Royal Ins. Co., 149 F.3d 1086, 1090 (10th Cir. 1998). Factors relevant to the inquiry include:
(1) the burden on the defendant, (2) the forum state's interest in resolving the dispute, (3) the plaintiff's interest in receiving convenient and effective relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states in furthering fundamental substantive social policies.Id. at 1095, citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113.
Analysis
In its motion to dismiss, Defendant contends that the Court lacks both specific and general jurisdiction in this matter. The Court will deal with each contention in turn.
A. Specific Jurisdiction
Plaintiff claims that Defendant has subjected itself to forum jurisdiction during the course of Plaintiff's employ by depositing Plaintiff's paychecks into a Wyoming bank account, and corresponding with Plaintiff at his Wyoming address. Defendant denies that it has ever purposefully directed any business activities towards this jurisdiction that have caused the harm alleged by Mr. Holiday.
The determination of whether a court can exercise specific jurisdiction over a defendant requires a finding that the defendant purposefully directed activities at forum residents and that the litigation results from injuries arising from those activities. Kuenzle, 102 F.3d at 455. Activities purposefully directed at the forum "are such that [the defendant] should reasonably anticipate being haled into court there."World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Unilateral activity by the plaintiff is not enough — there must be "some act by which the defendant purposefully 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 (1958). Personal jurisdiction does not obtain merely from "random," "fortuitous," or "attenuated" contacts. Keeton v. Hustler Magazine. Inc., 465 U.S. 770, 774 (1984)
3Com does not engage in certain corporate activities associated with purposeful availment: It does not maintain a workforce or office in Wyoming, and 3Com has no registered agent for service in the state. Plaintiff cites two cases for the proposition that depositing funds in a bank account within the forum state is sufficient to support personal jurisdiction, Fidelity State Bank v. Oles, 130 B.R. 578 (D. Kan. 1991) and Perkins v. Benquet Consol. Mining Co., 342 U.S. 437 (1952). However, closer examination of these decisions reveals that they do not advance such a severe reformulation of minimum contacts analysis.
In Perkins, the defendant corporation did far more than avail itself of banking services: within the forum jurisdiction, it maintained offices, kept files, sent and received correspondence, drew and distributed salary checks, transferred stock and held meetings. Perkins at 448. The court asserted general jurisdiction, based on the defendant's continuous and systematic business activities, but rejected specific jurisdiction since none of those activities gave rise to the plaintiff's claim. Because of its focus on general jurisdiction, Perkins does little to advance Mr. Holiday's assertion of specific jurisdiction.
Likewise, both the factual underpinnings and the legal analysis of the Oles case make it inapposite here. In Oles, the nonresident defendant opened and maintained a bank account, making deposits and withdrawals as part of a larger fraudulent scheme. 130 B.R. at 582-3. The court asserted personal jurisdiction pursuant to the Kansas long arm statute, Kan. Stat. §§ 60-308(b)(2), (5), which expressly allows personal jurisdiction over any nonresident who commits a tortious act in Kansas, or who enters into a contract with a Kansas resident to be performed in whole or in part by either party in Kansas. Id. at 584. The provisions of the Wyoming statute, Wyo. Stat. § 5-1-107(a), simply require personal jurisdiction be consistent with due process.
Nowhere in the Oles opinion does the district court hold that compliance with a long arm statute obviates the need for due process analysis. Immediately after establishing that the defendant's actions fell under the Kansas statute, the court dutifully engaged in the proper minimum contacts calculus, finding the creation and maintenance of a bank account in the forum for the purpose of defrauding forum residents supported specific jurisdiction. Oles at 584.
Here the bank account in question belonged to the Plaintiff and was merely the passive repository for Mr. Holiday's salary checks. Assuming arguendo that 3Com knew that they were making payments to a Wyoming bank, rather than a generic bank account with a multistate financial institution, more is required to show that Defendant purposefully availed itself of the laws of Wyoming and may be haled in to this Court consistent with the Due Process Clause.
Because Plaintiff has not adequately demonstrated purposefully directed activities on the part of the Defendant, it is not necessary to determine whether Plaintiff's alleged injuries resulted from Defendant's contacts with the forum, or whether the exercise of specific jurisdiction would be reasonable and fair.
B. General Jurisdiction
Plaintiff's arguments in favor of general jurisdiction hinge on Defendant's operation of a site on the World Wide Web. This website touts 3Com's work with the Wyoming Department of Education, lists retailers and service providers within he state of Wyoming, and contains direct purchasing options for Internet customers. Defendant asserts that maintenance of a website does not make 3Com subject to global service, and that 3Com's activities in Wyoming do not constitute a continuous or systematic presence within the forum.
A showing of general jurisdiction requires the analysis of a defendant's overall operations within the forum. "Because general jurisdiction is not related to the events giving rise to the suit, courts impose a more stringent minimum contacts test, requiring the plaintiff to demonstrate the defendant's `continuous and systematic general business contacts.'" OMI Holdings, Inc. v. Royal Ins. Co., 149 F.3d 1086, 1091 (citations omitted)
A mere posting on the Internet does not confer personal jurisdiction any more than a listing in a telephone directory. `[P]ersonal jurisdiction surely cannot be based solely on the ability of [forum] residents to access the defendants' websites, for this does not by itself show any persistent course of conduct by the defendants in the [forum]. Access to a website reflects nothing more than a telephone call by a [forum] resident to the defendants' computer servers . . . GTE New Media Servs. Inc. v. BellSouth Corp., 199 F.3d 1343, 1349-50 (D.C. Cir. 2000).
Cases dealing with general jurisdiction and the Internet recognize that not all websites are created equal. If merely posting information on the Internet were sufficient to establish minimum contacts, all operators of websites would be subject to personal jurisdiction nationwide. Id. at 1350. ("Indeed, under this view, personal jurisdiction in Internet-related cases would almost always be found in any forum in the country. We do not believe that the advent of advanced technology, say, as with the Internet, should vitiate long-held and inviolate principles of federal court jurisdiction.")
In order to use an Internet presence as a basis for general jurisdiction, there must be actual, continuous and systematic commercial contact with the forum. Coastal Video Communications Core. v. Staywell Corp., 59 F. Supp.2d 562, 571 (E.D.Va. 1999). The operation of a website may be considered in combination with other activities in the forum jurisdiction to establish minimum contacts, Mieczkowski v. Masco Core., 997 F. Supp. 782, 788 (E.D.Tex. 1998), but the requirement of minimum contacts remains the same.
It is not enough to find that an interactive website has the potential to reach a significant percentage of the forum state's population. Instead, for the contact to be continuous and systematic, there must be proof that the website is actually reaching a portion of the state's population. In traditional terms, the placing of a store or salesmen in a state is not sufficient to confer general jurisdiction over a defendant without some evidence that the store or salesmen actually generated sufficient sales in the forum state to be considered continuous and systematic.Dagesse v. Plant Hotel N.V., 113 F. Supp.2d 211, 222 (D. N.H. 2000).
Plaintiff cites a series of cases in support of the idea that "such proffered Internet business transactions provides (sic) a basis by itself for a finding of personal jurisdiction." (Pl's Mem. in Opp'n to Def.'s Mot. to Dismiss at 12.) Yet most of the case authority to which Plaintiff refers stands for the premise that claims arising from Internet commerce can support exercise of specific jurisdiction where the genesis of the claim is the website itself. E.g. Intercon, Inc. v. Bell Atlantic, 205 F.3d 1244 (finding defendant purposefully availed itself by interfering with Oklahoma Internet server causing technical problems);Zippo Manuf. Co. v. Zippo Dot Com, Inc. 952 F. Supp. 1119 (deciding online computer news service was subject to personal jurisdiction by operating Internet site accessible in forum with domain name that violated trademark); Heroes, Inc. v. Heroes Foundation, 958 F. Supp. 1 (finding under District of Columbia long arm statute, that charitable organization subject to personal jurisdiction for trademark infringements in newspaper ads and on Internet home page); Compuserve v. Patterson, 89 F.3d 1257 (finding under Ohio long arm statute, nonresident subscriber who contracted with computer network service purposefully availed himself of benefits of doing business in state in which service was based); Thompson v. Handa-Lopez, 998 F. Supp. 738 (supporting personal jurisdiction in claim for gaming proceeds against nonresident casino website operator);Gary Scott Int'l v. Baroudi, 981 F. Supp. 714 (finding advertising in forum in violation, of trademark subject to Massachusetts long arm statute); Inset Systems, Inc. v. Instruction Set, Inc., 937 F. Supp. 161 (applying Connecticut long arm statute to Internet and telephone solicitation in forum in violation of trademark).
Even resolving all disputed facts in the Plaintiff's favor, 3Com's operations in Wyoming do not rise to the level of continuous and systematic behavior justifying the exercise of general jurisdiction. Defendant's web presence is interactive and would certainly assist any potential Wyoming customers. But there is no indication that any commerce is conducted with Wyoming through 3Com's site, or that Wyoming citizens even access the site in significant numbers.
The Court is not persuaded that a single contract with the state Department of Education and a list of third party resellers and servicers of 3Com products in Wyoming is sufficiently continuous and systematic. Defendant does not maintain a local office, does not send sales agents into Wyoming on a regular basis, conducts a relatively small amount of their overall business in the state, and — contents of the website notwithstanding — does not hold itself out as doing business in the state.
Because Plaintiff has not demonstrated general personal jurisdiction, it is unnecessary to determine whether an exercise of jurisdiction here comports with fair play and substantial justice.
Conclusion
THEREFORE this Court hereby ORDERS that Defendant's Motion to Dismiss Plaintiff's claims for Lack of In Personam Jurisdiction, pursuant to Fed.R.Civ.P. 12(b)(2) is GRANTED. Plaintiff's claims are DISMISSED WITHOUT PREJUDICE.