Opinion
J04-19 CV (JWS), [Re: Motions at Dockets 7 and 17].
December 3, 2004
ORDER FROM CHAMBERS
I. MOTIONS PRESENTED
At docket 7 defendants L. Eric Whetstone ("Eric"), Ilona Whetstone ("Ilona") (collectively "Whetstones"), and All-American Bottled Water Corporation ("All-American") move to dismiss for lack of in personam jurisdiction. Alternatively, they request transfer of this case to the Western District of Washington for the convenience of the parties and witnesses. Plaintiff Don Kubley ("Kubley") opposes the motion, which is fully briefed. At docket 14 Kubley has requested oral argument, but oral argument would not materially assist the court, so the request for oral argument is denied.
D.AK. LR 7.2(a)(3)[B].
At docket 17, Kubley has filed an unopposed motion for leave to file an amended complaint. No responsive pleading has been filed by defendants, so the amended complaint constitutes an "of course" amendment, for the filing of which leave of court is not required. Consequently, the amended complaint is deemed filed and supercedes the original complaint in its entirety. This moots the motion at docket 17. The court will determine the motion at docket 7 as though it addresses the amended complaint.
See generally 6 WRIGHT MILLER, FEDERAL PRACTICE AND PROCEDURE: CIVIL (2D), §§ 1476, 1480.
II. APPLICABLE LAW
In a diversity action, a federal district court may exercise in personam jurisdiction over a non-resident defendant if jurisdiction is proper under the long-arm statute of the forum state and consistent with federal constitutional due process principles. Alaska has adopted a long-arm statute, which provides in relevant part:
Fireman's Fund Insurance Co. v. National Bank of Cooperatives, 103 F.3d 388, 893 (9th Cir. 1996).
A.S. § 09.05.015.
(a) A court of this state having jurisdiction over the subject matter has jurisdiction over a person served in an action according to the rules of civil procedure
(1) in an action, whether arising in or out of this state, against a defendant who, when the action is commenced,
(A) is a natural person present in this state when served;
(B) is a natural person domiciled in this state;
(C) is a domestic corporation; or
(D) is engaged in substantial and not isolated activities in this state, whether the activities are wholly interstate, intrastate, or otherwise;
* * * *
(5) in an action that
(A) arises out of a promise, made anywhere to the plaintiff or to some third party for the plaintiff's benefit, by the defendant to perform services in this state or to pay for services to be performed in this state by the plaintiff;
(B) arises out of services actually performed for the plaintiff by the defendant in this state, or services actually performed for the defendant by the plaintiff in this state if the performance in this state was authorized or ratified by the defendant;
The Alaska Supreme Court has construed the Alaska long-arm statute as establishing jurisdiction to the maximum extent permitted by due process of law. As a consequence, this court need only consider whether asserting jurisdiction over the defendant would violate the due process clause of the fourteenth amendment. In making this determination, which involves a question of federal constitutional law, this court is not bound by the decisions of the Alaska Supreme Court, although they may be persuasive. Kubley bears the burden of establishing that this court has jurisdiction over the Whetstones and All-American. Where, as here, the court receives only written submissions in the form of pleadings and affidavits, the quantum of proof is whether the plaintiff has presented a prima facie showing of jurisdictional facts. 28 U.S.C. § 1404(a) provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." This statute partially displaces the common law doctrine of forum non conveniens. Nonetheless, in this circuit, forum non conveniens considerations provide helpful guidance in ruling on a § 1404(a) motion. The burden is on the defendants to make a strong showing of inconvenience to negate the plaintiff's choice of the forum.
Volkswagenwerk, A.G. v. Klippen, GmbH, 611 P.2d 498, 500 (Alaska), cert. denied sub nom., Klippen, GmbH v. Volkswagen of America, Inc., 339 U.S. 974 (1980).
Insurance Co. of North America v. Marina Salina Cruz, 649 F.2d 1266, 1269 (9th Cir. 1981); see also Fireman's Fund Insurance Co. v. National Bank of Cooperatives, supra ("[t]he statutory and constitutional requirements therefore merge into a single due process test").
Sher v. Johnson, 911 F.2d 1357, 1363 n. 2 (9th Cir. 1990); Data Disc., Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1287 n. 3 con't (9th Cir. 1977).
Shute v. Carnival Cruise Lines, 897 F.2d 377, 379 (9th Cir. 1990), rev'd on other grounds sub nom., Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991).
Omeluk v. Langsten Slip Batbyggeri A.S., 52 F.3d 267, 268 (9th Cir. 1995).
Miskow v. Boeing Co., 664 F.2d 205, 207 (9th Cir. 1981), cert. denied, 455 U.S. 1020 (1982).
Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 843 (9th Cir. 1986).
Id.
III. BACKGROUND
This action was originally filed in the Alaska Superior Court on July 16, 2004. Defendants timely removed the case to this court on the basis of complete diversity between the parties and that the amount in controversy exceeds $75,000. On August 27, 2004, defendants filed the pending motion to dismiss. The amended complaint seeks damages and equitable relief against the Whetstones and All-American, based upon various legal theories, arising out of the acquisition by All-American of the former Miller Brewing Company facility located in Tumwater, Washington.Where there are factual disputes present in the record, the court may not weigh credibility. Rather, in ruling on the motion to dismiss for lack of in personam jurisdiction, the court must accept as "fact" the uncontroverted allegations of the complaint and the facts presented in the affidavits submitted by Kubley, and those facts properly established by the Whetstones and All-American that are uncontroverted by competent evidence. It is upon these things only that the court may rely when deciding if Kubley has established a prima facie showing of jurisdictional facts at this stage of the proceeding.
Dole Foods Co., Inc. v. Watts, 303 F.2d 1104, 1108 (9th Cir. 2002); Data Disc., Inc. v. Systems Technology Associates, Inc., supra, 557 F.2d at 1286-87.
The facts asserted by Kubley are presumed to be true solely for the purpose of ruling on the motion at bar. Where those assertions are in dispute, it will be necessary for Kubley to establish them as facts at trial by a preponderance of the evidence. Although there is a substantial dispute as to the "deal," and who said what to whom, there is very little dispute about the facts essential to a determination of the jurisdictional basis: the extent of the defendants' contacts with Alaska. The court notes that the filings by the parties with respect to the jurisdictional issue are voluminous and for the most part, especially the opposition filed by Kubley, address the merits of the case, not the basis for the exercise of jurisdiction by this court.
Using that standard, the relevant facts may be summarized as follows:
1. Kubley is a citizen of Alaska, the Whetstones are citizens of Pennsylvania, and All-American is a Nevada corporation doing business in the State of Washington.
2. The Whetstones are directors and the sole shareholders of All-American. Eric is also the president.
3. At some time in 2002, Eric visited Alaska on a fishing trip and became interested in using the Ward's Cove fish processing plant in Hoonah as a water bottling plant.
4. Kubley learned of Eric's interest through a friend who had been Eric's guide on the fishing trip, and the guide provided Kubley with Eric's Lancaster, Pennsylvania, telephone number.
5. In February 2003, while in Washington, D.C., Kubley called Eric at his home in Pennsylvania. This was followed shortly by a meeting between Kubley and Eric in Pennsylvania.
6. During the Pennsylvania meeting, the oral agreement upon which this action is based was made. The intent of that agreement was to establish a water bottling company headquartered in Alaska. Later, it was agreed that the agreement would extend to water bottling facilities located outside Alaska as well.
Alaska Best Bottled Water Corporation was formed for the purpose of pursuing business opportunities related to bottled water facilities in Alaska.
7. Kubley, on behalf of Eric, pursued several potential opportunities for establishing bottled water plants in Alaska, including the Ward's Cove Packing Co. facilities in Excursion Inlet, Haines, and Ward's Cove, and the Sitka Beverage Corp. water bottling plant operated by True Alaskan Bottling Company. None of these opportunities were developed into plants.
8. Eric had numerous interstate telephone conversations with Kubley, who was in Alaska, concerning the possible acquisition of the Ward's Cove and Sitka Beverage Properties. Eric also retained E. Budd Simpson (a Juneau lawyer) and Robert Loescher (an Alaska resident and former CEO of Sealaska Corporation) to assist in the Ward's Cove and Sitka Beverage transactions.
9. A significant amount of the services provided by Kubley, Simpson, and Loescher in connection with the Ward's Cove and Sitka Beverage transactions were expected to be and were, in fact, performed in Alaska.
10. Eric also visited Alaska in connection with an unrelated transaction for a publicly held corporation (Tasty Fries) during which he met with the mayor of Anchorage, members of the mayor's staff, and others. That transaction also did not come to fruition.
The record does not indicate, other than as a shareholder, the capacity in which Eric was acting on behalf of Tasty Fries. There is no indication that Eric was an officer or authorized agent of Tasty Fries.
11. Kubley also performed services in connection with the acquisition of the former Miller Brewing plant in Tumwater, Washington, by All-American. Except as set forth in ¶ 12, below, the majority of, if not all, activities by Kubley in connection with the Tumwater facility appear to have been performed outside Alaska.
12. In May 2004, apparently at the request of Brian C. Andrews, the Private Client Assistant Vice President of the Merrill Lynch Juneau office, Kubley arranged a conference call between Andrews, another member of Merrill Lynch (Duane Duddly), and Eric to discuss Eric's desire to obtain capital to finance the bottled water facility in Tumwater. Duddly, at Eric's request, subsequently traveled to Tumwater to tour the facility. Merrill Lynch also prepared a business plan for Eric. This transaction also did not come to fruition.
13. All-American and Alaska Best are two separate corporate entities formed under Nevada law. The corporate charter for Alaska Best has been revoked or suspended by the State of Nevada for failure to comply with Nevada law's reporting requirements.
These facts are taken from the declaration of Peter Skarpias. The only factual opposition is contained in Kubley's affidavit prepared by Kubley's Alaska counsel and the affidavit of Robert Loescher prepared by Kubley's Seattle counsel. In Kubley's affidavit he refers twice to a name change from Alaska Best to All-American [footnote 5 to ¶ 19 on page 11 and ¶ 36 on page 26]. In Loescher's affidavit he states that Alaska Best was later renamed All-American [¶ 3 on page 2]. Both affidavits state that the facts recited therein are within the personal knowledge of the affiant. However, in addition to being conclusory statements bereft of supporting facts, how either affiant could have had personal knowledge of those facts is unexplained and, in light of the Skarpias declaration and the articles of incorporation attached thereto, inexplicable. It is apparent that counsel either prepared the affidavits without checking the facts and the affiants did not closely review them before signing them, or counsel did not investigate the obviously incorrect factual statements before having them executed. Either way, counsel for plaintiff has failed to meet the standard required under FED. R. CIV. P. 11(b), which the court finds troubling.
14. All-American did not acquire any assets nor take over any business of Alaska Best. All-American does not do business in Alaska.
V. DISCUSSION: IN PERSONAM JURISDICTION
There are two potential bases for this court to exercise in personam jurisdiction over defendants: general and specific. The two differ in the nature, degree, and extent of the contacts with the forum which are required.
For a defendant to be subject to general in personam jurisdiction, it must have such continuous and systematic contacts with the forum that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice. If a defendant's contacts with the forum are not continuous and systematic, the forum may exercise only specific jurisdiction, which is determined by the following three-part test:
(1) The nonresident defendant must purposefully direct his activities or consummate some transaction with the forum or resident 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.
Reebok International Limited v. McLaughlin, 49 F.3d 1387, 1390 (9th Cir.), cert. denied sub nom., Reebok International Limited v. Banque Internationale A. Luxemburg S.A., 516 U.S. 908 (1995) (internal citation omitted).
The facts in this case show large differences between the three defendants with respect to the nature, degree, and extent of the contacts each has had with Alaska. While the parties' relationships with each other may be significant in determining their ties to the forum, the requirements of due process must be met with respect to each individual defendant. Thus, a "one size fits all" approach is not possible and the basis for the exercise of jurisdiction over each defendant must be analyzed separately.
Rush v. Savuk, 444 U.S. 320, 332 (1980); Sher v. Johnson, supra, 911 F.2d at 1365-66.
A. Ilona Whetstone.
Ilona's sole personal contact with Alaska consisted of a vacation in 1999. Kubley appears to concede that this, in and of itself, is an insufficient basis upon which to base in personam jurisdiction. For this court to exercise jurisdiction over Ilona, the contacts between the other defendants and Alaska must be attributable to her as a principal. Kubley asserts, without citation to authority, that in personam jurisdiction exists based upon Ilona's status as the wife of L. Eric Whetstone and as an officer, director, and shareholder of All-American. For the following reasons, the court disagrees.
Sher v. Johnson, supra. ("[f]or purposes of personal jurisdiction, the actions of an agent are attributable to the principal").
Kubley has cited no case and the court's independent research has not revealed any case in which in personam jurisdiction was properly exercised over an individual based solely upon the fact that the person was the spouse of another over whom the court had in personam jurisdiction. While the result might differ if this were a suit involving a marital community with married parties residing in a community property state, that is not the situation in the case at bar. The court is not inclined to step backwards in time and resurrect the discarded notion that a husband acts as the agent of the wife in all matters. In the absence of some evidence that one spouse was acting as the agent of the other spouse, the court declines to presume that an agency existed based solely on the existence of a marriage.
See RESTATEMENT (SECOND) OF AGENCY, § 22, cmt b. ("[n]either husband nor wife by virtue of the relation has power to act as agent for the other").
Kubley has likewise cited no authority for the bald assertion that, if the court has in personam jurisdiction over All-American, the fact that Ilona is an officer, director, and shareholder of All-American is sufficient to confer jurisdiction over her. Courts generally respect corporate boundaries in the jurisdictional context. While it is true that the actions of officers and directors are imputed to the corporation, no generally accepted principle of law recognizes that the acts of the corporation or other officers/directors/shareholders are imputed to an officer, director or shareholder.
Thus, personal jurisdiction over individual officers and employees of a corporation may not be predicated on the federal court's jurisdiction over the corporation itself, unless the individuals are engaged in activities within the forum court's jurisdiction that would subject them to the application of the state's long-arm statute.
Accordingly, this court lacks in personam jurisdiction over Ilona Whetstone.
Forsythe v. Overmeyer, 576 F.2d 779, 783 (9th Cir.), cert. denied sub nom., Overmeyer v. Forsythe, 439 U.S. 864 (1978).
Cf. 3 FLETCHER CYCLOPEDIA OF PRIVATE CORPORATIONS, § 837 (Perm. ed 1998).
4A WRIGHT MILLER, FEDERAL PRACTICE PROCEDURE: CIVIL (3D), § 1069.4 (2002); see also 2 FLETCHER CYCLOPEDIA OF PRIVATE CORPORATIONS, § 36 (Perm ed. 1998).
B. All-American.
The sole contact with Alaska by All-American, other than the agreement forming the basis for this lawsuit, consisted of contact with the Juneau office of Merrill Lynch concerning the possibility of obtaining financing for the acquisition of the Tumwater facility, a transaction that also was never consummated. Although in his opposition to the motion Kubley asserts that he performed substantial services in Alaska on behalf of All-American, other than to arrange the Merrill Lynch meeting, he does not identify any services performed in Alaska that relate to the acquisition of the Tumwater facility. This single, isolated event is simply insufficient to support either general or specific in personam jurisdiction under extant law.
There is an indication that Kubley made telephone calls from Alaska ostensibly as the vice president of All-American. These cannot be said to be acts by which All-American availed itself of the privilege of conducting activities within Alaska invoking the benefits and protections of its laws. This is the touchstone of the "minimum contacts" test. Hanson v. Denckla, 357 U.S. 235, 253 (1958).
Kubley's argument in support of the existence of in personam jurisdiction over All-American is predicated upon the theory that All-American is the successor-in-interest to Alaska Best or the alter ego of Eric. Unfortunately for Kubley, his theory is speculative, based more on supposition or wishful thinking than facts. Kubley has not introduced any evidence that supports either the successor-in-interest or the alter-ego theories. The facts adduced by All-American in its affidavits which conclusively establish the contrary are uncontroverted by Kubley.
Allegations in the complaint, when controverted by an affidavit, are insufficient to confer personal jurisdiction over a non-resident defendant. Chem Lab Products, Inc. v. Stepanek, 554 F.2d 371, 372 (9th Cir. 1977); see also Dole Food Co., Inc. v. Watts, supra.
Accordingly, this court lacks in personam jurisdiction over All-American.
C. L. Eric Whetstone.
Kubley all but concedes that there is no general in personam jurisdiction over Eric. Kubley makes an elliptic reference to general jurisdiction in footnote 3 on page 25 of the opposition referring to the Tasty Fries transaction and asserts that Eric retained Kubley as a consultant in connection with that proposed transaction. Unfortunately for Kubley, statements of counsel are not evidence and what evidentiary basis there is indicates that, although he was certainly interested as an investor/shareholder in Tasty Fries, the Tasty Fries transaction was not to be undertaken on his own behalf. Moreover, as with the other Alaska-based transactions, it also failed to come to fruition. Based on the record before it, this court cannot find that Eric's contacts with the State of Alaska were "systematic and continuous." Eric's forum-related activities were primarily directed towards a single objective — establishing a bottled water operation in Alaska — which did not come to fruition. This is simply insufficient to subject Eric to the jurisdiction of the courts in Alaska for transactions unrelated or unconnected to his activities within Alaska. Kubley has not met his burden of establishing a prima facie case of general in personam jurisdiction.
The court agrees with Kubley that Eric's actions showed a clear intent to do business in Alaska; but an unfruitful intent to do business is not the same as doing business.
As noted above, deciding whether there is specific in personam jurisdiction over a non-resident defendant involves application of a three-part test, which may be summarized as: (1) purposeful injection into the forum; (2) a nexus between the contacts with the forum and the claim; and (3) the reasonableness of exercising jurisdiction over the non-resident defendant. All three must coalesce or jurisdiction is lacking, i.e., the failure to meet any prong is fatal to the exercise of specific in personam jurisdiction. The court examines each in turn.
See, e.g., Glencore Grain Rotterdam B.V. v. Shivnath Rai Harnarain Co., 284 F.3d 1114, 1124 (9th Cir. 2002); Omeluk v. Langsten Slip Batbyggeri A.S., supra, 52 F.3d at 268; Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir. 1993).
1. Purposeful Injection. In this case, Alaska residents, including Kubley, were retained to perform services in Alaska in connection with a potential business opportunity — establishment of bottled water facilities — to be located within Alaska. Although the potential Alaska business opportunities were never consummated, Eric's acts clearly constitute a purposeful direction of activities into Alaska. It is also clear that the nature, extent, and scope of these activities were sufficient to allow Eric to invoke the benefits and protections of Alaska's laws. Indeed, it is fair to state that Eric's activities at the outset were directed primarily at Alaska, with excursions into other forums arising later. At the very least, it cannot be said that the contacts with Alaska were so "random," "fortuitous," or "attenuated" that they are insufficient to support jurisdiction without violating the principles of fair play and substantial justice.
See, e.g., Dole Foods Co., Inc. v. Watts, supra; Haisten v. Grass Valley Medical Reimbursement Fund, 784 F.2d 1392, 1397 (9th Cir. 1986).
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 486 (1985).
That does not, however, end the inquiry. Kubley clouds the issue by asserting that Eric was acting as the agent of Alaska Best Water (and, later, All-American). Under the "fiduciary shield" doctrine, if the presence of an individual within the forum state is solely in his capacity as a corporate officer, in personam jurisdiction over the individual is lacking. As the Ninth Circuit has noted, however, the "fiduciary shield" doctrine is not one of constitutional dimension and its application is governed by state law. It is clear that in Alaska the "fiduciary shield" doctrine does not insulate an officer from the exercise of personal jurisdiction over him. Where, as in this case, it is unclear whether an individual's presence is solely on behalf of the corporation or the individual is appearing in a dual capacity, corporate and individual, it is the opinion of the court that resolution should favor the exercise of in personam jurisdiction over the individual.
Lehigh Valley Industries, Inc. v. Birenbaum, 527 F.2d 87, 92-93 (2nd Cir. 1975).
Davis v. Metro Productions, Inc., 885 F.2d 515, 521 (9th Cir. 1989).
Cramer v. Wade, 985 P.2d 467, 472 (Alaska 1999).
Kubley has made a prima facie showing that the first prong, purposeful injection into the forum state, has been met.
2. Nexus Between Activities and Claim. Although Kubley has pleaded several different legal theories as supporting recovery on his claim, the claim itself is simple enough: Kubley says that he is entitled to damages consisting of fees, salary, profits, royalties, and expenses for the formation of All-American. No part of his claim arises out of the activities that surrounded the unconsummated endeavors to establish water bottling facilities in Alaska. The gravamen of Kubley's action is the breach of an agreement between Kubley and Eric, which Kubley characterizes as being either one for compensation or formation of a partnership or a joint venture. Thus, this action sounds in contract.
This prong of the test, which focuses on the connection between the defendant's forum-related activities and the claim itself, requires the court to examine the nature, degree, and extent of Eric's activities as they related to the acquisition of the Tumwater, Washington, facility. In this circuit this requires the court to determine whether the claim would not have arisen "but for" the forum-related activities.
Omeluk v. Langsten Slip Batbyggeri A.S., supra, 52 F.3d at 271-72.
There are but two contacts between Eric and Alaska that directly relate to the Tumwater facility: (1) the agreement with Kubley, an Alaska resident; and (2) the contact with the Juneau office of Merrill Lynch regarding potential financing for acquisition of the Tumwater facility. It is well established that contracting with a resident of the forum is insufficient to warrant the exercise of in personam jurisdiction over a non-resident.
Instead, we have emphasized the need for a "highly realistic" approach that recognizes that a "contract" is "ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction." It is these factors — prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing — that must be evaluated in determining whether the defendant purposefully established minimum contacts within the forum.
Burger King Corp. v. Rudzewicz, supra, 471 U.S. at 478.
Id. at 479 (internal citations omitted).
In this case, the agreement may be interpreted as consisting of an agreement that, although initially limited to the bottled water business within Alaska, was later expanded to encompass similar or like businesses in other locales, including Washington. Under this interpretation, performance under the agreement may be viewed as a series of acts comprising a continuous course of action. The terms of the agreement taken in its total context and the subsequent course of dealing between the parties establish that Kubley was expected to perform a substantial part of his duties or obligations under the agreement within Alaska. The consequences of the performance of that agreement were likewise contemplated to occur in substantial part within Alaska. While, as discussed further below, the nexus between Eric's contacts with Alaska and the claim made by Kubley are substantially diluted by the fact that only one of the other contacts directly relates to the Tumwater facility, treating the contacts as part of a single course of action establishes the necessary minimum contacts with the forum.
It may also be interpreted as consisting of two separate agreements. For the purpose of ruling on the motion at bar, the court accepts the single-agreement interpretation.
Kubley has made a prima facie showing that the claim arose out of Eric's contacts with Alaska, thus meeting the second prong of the test.
3. Reasonableness. In evaluating the application of this prong, the court must balance seven factors: (1) the extent of defendant's purposeful availment; (2) the burden on defendant to litigate in the forum; (3) the extent of conflict with defendant's sovereign state; (4) the forum's interest in hearing the dispute; (5) the most efficient resolution of the controversy; (6) importance to plaintiff of a convenient forum and effective relief; and (7) the existence of an alternative forum. No one factor is dispositive; the court must consider all seven.
(1) Extent of the Availment. Under the first factor, the extent of the defendant's purposeful availment, or the "degree of interjection," must be considered under the reasonableness standard. Even if there is sufficient "interjection" to satisfy the purposeful injection prong, the smaller the degree of interjection, the less reasonable it may be to exercise jurisdiction. In this case, with respect to the claim asserted, Eric's contacts with Alaska are substantially diluted by the tenuous connection between the vast majority of Eric's contacts with Alaska and the performance by Kubley within Alaska in connection with the agreement sued upon and related claims for relief. Thus, this factor, though it weighs in favor of exercising jurisdiction, is not a large weight on the scale.
(2) Burden on Defendant. There is, of course, always a burden imposed on a defendant called to defend himself in a foreign jurisdiction. This burden is especially heavy when the non-resident defendant has no ongoing connection with or relationship with the forum. However, as Kubley notes, the burden on Eric, a resident of Pennsylvania, if forced to defend in Alaska is not significantly greater than the burden that would be imposed in defending in Eric's preferred forum, Washington. As with the first factor of this prong, the law in this Circuit is inconsistent on whether the corresponding burden on the plaintiff in bringing the action in the alternative forum lessens or offsets the burden on the defendant. Kubley, of course, asserts that the burden of prosecuting this action will be increased if he is forced to litigate in another forum. His position and argument proceed on the assumption that this court has jurisdiction over all the defendants, including All-American. The absence of jurisdiction over All-American means Kubley faces an entirely different situation. His damages included compensation and royalties, the evidence of which is all located in Washington and presumably within the knowledge of Washington witnesses who are not parties or officers of a party. If this action proceeds in Juneau, Kubley will bear the burden and costs of obtaining and presenting that evidence, which could require Kubley to bring the evidence physically located in Washington to Juneau. Thus, there is a significant possibility that the burden on Kubley would be reduced, not increased, if this action were transferred to the Western District of Washington. The burden on Kubley caused by moving to the alternative forum seems to be negligible, or even a slight boon.
(3) Conflict with Defendant's Sovereign State. On the third factor, it does not appear from the record before this court that there is any conflict with the sovereignty of Pennsylvania. Indeed, Eric has not only failed to assert any such conflict but has requested that the court transfer the case to the Western District of Washington, not Pennsylvania. This factor has no bearing on whether Alaska, rather than Washington, is the place for this litigation.
(4) Forum's Interest. A state almost invariably has an interest in providing a forum for the redress of harm inflicted on its citizen's by nonresidents. There is nothing in the record here which refutes this presumed interest. On the other hand, unlike tort cases, the interest of a state in resolving a contractual dispute involving a resident in a situation where, as here, the contract was neither solicited nor made in the forum state, is not particularly strong. This factor weighs slightly in favor of exercising jurisdiction in Alaska.
(5) Efficient Resolution. In evaluating this factor, the court looks primarily at where the witnesses and evidence are located. Both parties have identified witnesses: those identified by Kubley reside in Alaska while those identified by Eric reside in Washington. The problem is that neither side has identified any witness who may competently testify to the critical facts underlying this lawsuit, i.e., facts that establish the existence of an agreement in the first instance and the terms of that agreement. Kubley has not identified a single witness in Alaska who can testify that Eric made any statement to, or in the presence of, the witness about the terms of the agreement. Conversely, Eric has not identified any witness outside Alaska to whom, or in the presence of whom, Kubley made a statement that negates Kubley's version of the agreement. There is also a serious question of the relevance and/or admissibility on hearsay grounds of much of the testimony that the identified witnesses may have to offer. Both parties bemoan the lack of the ability to compel testimony if the case is tried in either Alaska or Washington. Be that as it may, it is a point more properly and appropriately addressed in connection with the change of venue motion. As regards the physical evidence, that consists of taped telephone conversations and e-mails that may be physically located in Alaska (or, with respect to the tapes, may already be physically in Washington). E-mails to be admitted into evidence must necessarily be printed and authenticated. Presumably, the e-mails will be printed in Alaska and then transported to the courthouse, be it in Alaska or Washington. The non-testimonial evidence on the subject of damages appears for the most part to be physically located in Tumwater, Washington. Wherever they may be physically located, the burden on the party to produce either in Washington or Alaska is insignificant.
Panavision International, L.P. v. Toeppen, 141 F.3d 1316, 1323 (9th Cir. 1998).
Core-Vent Corp. v. Nobel Industries, A.B., 11 F.3d 1482, 1488 (9th Cir. 1993). The court notes that there is a significant degree of inconsistency within the circuit on this point. See, e.g., Roth v. Garcia Marquez, 942 F.2d 617, 623 (9th Cir. 1991) ("In light of the first prong of purposeful availment, analysis of this first factor in the third prong would be redundant. As we have concluded, albeit narrowly, that appellees purposely availed themselves of the privilege of conducting activities in California, there is no need to analyze this first factor separately."). The problem with the Roth approach is that it effectively eliminates the first factor in the third prong, making it surplusage (if there is no purposeful availment in the first instance, there is no need to examine the third prong at all). The third prong is, after all, a balancing test in which each of the enumerated factors must be weighed. This requires the court to weigh the relative strength of each factor. Core-Vent on the other hand, unlike Roth, recognizes that the weaker the injectment by the defendant into the forum, the less reasonable the exercise of jurisdiction. Faced with two irreconcilable conflicting "controlling" decisions, the court must follow the one that, in the view of the court, is the most persuasive. In this case, Core-Vent is the most consistent with the intent and purpose of the "reasonableness" test adopted by the Ninth Circuit.
Core-Vent Corp. v. Nobel Industries, A.B., supra.
Compare, e.g., Federal Deposit Insurance Corp. v. British-American Insurance Co., 828 F.2d 1439, 1444 (9th Cir. 1987) ("[t]he primary concern is the defendant's burden") with Sinatra v. National Enquirer, Inc., 854 F.2d 1191, 1199 (9th Cir. 1988) ("[w]e examine the burden on the defendant in light of the corresponding burden on the plaintiff").
Cf. Roth v. Garcia Marquez, supra, 942 F.2d at 624; American National Bank and Trust Co. v. International Seafoods of Alaska, Inc., 735 P.2d 747, 752-53 (Alaska 1987).
See Core-Vent Corp. v. Nobel Industries, A.B., supra; Roth v. Garcia Marquez, supra.
This factor favors neither party's argument.
(6) Convenient and Effective Forum. As has been noted, "no doctorate in astrophysics is required to deduce that trying a case where one lives is almost always a plaintiff's preference." Kubley argues that only Alaska provides effective relief because the tape recordings would be admissible under Alaska law but inadmissible under Washington law. Kubley's concerns are misplaced because it is the federal law of evidence which applies. "Evidence obtained in violation of neither the Constitution nor federal law is admissible in federal court proceedings without regard to state law." Thus, as long as the tape recordings were not obtained in violation of federal law, they are admissible. Conversely, if obtained in violation of federal law they are inadmissible. State law has no impact on the admissibility issue whether this case is tried in a federal court in Alaska or Washington. Kubley presents and this court perceives no argument that he can obtain any more effective relief in this court than he can in the Western District of Washington. All things considered, this factor favors exercise of jurisdiction in Alaska, but only by a slight margin.
(7) Alternative Forum. Eric has supplied an alternative forum, Washington. This factor favors Eric's position.
Roth v. Garcia Marquez, supra.
United States v. Little, 753 F.2d 1420, 1434 (9th Cir. 1984).
Id. at 1435; Leitman v. McAusland, 934 F.2d 46, 50 (4th Cir. 1991).
Of the seven factors, three favor Kubley's position (availment, interest of the forum, and convenience of the plaintiff), two favor Eric's position (burden on the defendant and availability of an alternative forum), and two are essentially neutral (conflict with sovereignty of defendant's domicile and efficient resolution). None of the seven factors can be said to be particularly weighty in this case; the overall balance is very close.
Nonetheless, at this stage Kubley need only establish a prima facie case and once purposeful availment is established, exercise of jurisdiction is presumptively reasonable requiring a compelling case to rebut the presumption. Eric may be able to show that the exercise of jurisdiction by an Alaskan court is unreasonable, but the closeness of the question indicates that he can not do so in a compelling fashion. Kubley has made a prima facie showing that the exercise of jurisdiction in Alaska is reasonable, thus meeting the third and final prong of the test.
Burger King Corp. v. Rudzewicz, supra, 471 U.S. at 476-77.
The court concludes that it has in personam jurisdiction over L. Eric Whetstone
VI. DISCUSSION: TRANSFER
Defendants have requested, in the event the court finds it has jurisdiction, that it transfer this lawsuit to the Western District of Washington. Since this court has determined that jurisdiction over Ilona Whetstone and All-American Bottled Water Corporation is lacking, the motion to transfer directly affects only plaintiff's claims against L. Eric Whetstone.
For the convenience of the parties and witnesses, in the interests of justice, a district court may transfer any civil action to any other district or division where it may be brought.
In determining a motion under § 1404(a), this court is required to exercise its discretion according to an individualized case-by-case consideration of convenience and fairness.
Stewart Organization, Inc. v. Ricoh Corp, 487 U.S. 22, 29 (1988).
The Ninth Circuit has identified ten nonexclusive factors that the court should weigh in its determination whether transfer is appropriate in a particular case: (1) the location where the relevant agreements were negotiated and executed; (2) the state that is most familiar with the governing law; (3) the plaintiff's choice of forum; (4) the respective parties' contacts with the fora; (5) the contacts relating to the plaintiff's cause of action in the chosen forum; (6) the differences in the costs of litigation in the two fora; (7) the availability of compulsory process to compel attendance of unwilling non-party witnesses; (8) the ease of access to sources of proof; (9) whether a forum selection clause is present; and (10) the relevant public policy of the forum state, if any. The court also considers any other problems or factors that make trial of the matter easy, expeditious and inexpensive. The court will analyze each of these factors as they apply to litigation in Alaska and Washington.
Jones v. GNC Franchising, Inc., 211 F.3d 495, 498-99 (9th Cir. 2000).
Decker Coal Co. v. Commonwealth Edison Co., supra, 805 F.2d at 843.
1. Location Where Relevant Agreement Negotiated/Executed. The only evidence with respect to the place where the agreement upon which Kubley bases this lawsuit was negotiated and made is that it was in Pennsylvania. This factor is neutral, supporting neither a transfer to Washington nor retention in Alaska.
2. Familiarity With Governing Law. The source of the governing law in this case is not crystal clear. It does not appear that Alaska law will apply to any issue material to the eventual outcome. The contract was made in Pennsylvania between a Pennsylvania domiciliary and an Alaska domiciliary, to be performed and its subject matter, insofar as it relates to the claim asserted by Kubley, primarily in Washington. To the extent there are issues concerning contract formation, validity, interpretation, or performance, they will more likely than not be determined by reference to Pennsylvania or, perhaps, Washington, law. This factor is inconclusive and, therefore, neutral.
3. Plaintiff's Choice of Forum. Plaintiff has chosen Alaska as the appropriate forum. That factor clearly favors retention of the case in Alaska.
4. Respective Parties' Contacts with the Fora. Kubley is a resident of and currently has his principal business in Alaska. Eric, on the other hand, has no apparent on-going contact with Alaska. Both parties on the other hand appear to have significant business contacts with Washington, both in the past and currently. Indeed, this very action is based principally upon the parties' contacts with and a business operation located in Washington. This factor favors a transfer of the lawsuit to Washington.
5. Contacts Relating to the Cause of Action in Alaska. As noted above, the contact with Alaska related to the transaction underlying the case at bar (other than the fact Kubley is a resident of Alaska) — the acquisition of the Tumwater facility — is a single, isolated contact with the Juneau office of a multi-national brokerage house, Merrill Lynch. Eric's other contacts with Alaska, although relatively extensive over a period of approximately one year, do not themselves form any of the factual basis for the claims asserted by Kubley. At best, the connection with the claims asserted by Kubley is tangential. Even the contact with Merrill Lynch, which was itself unconsummated, provides limited, if any, evidentiary support for the claims asserted by Kubley. In sum, connection between Eric's contacts with Alaska and the claims asserted by Kubley is substantially attenuated. This factor does not support retention of this action in this district.
6. Differences in Costs of Litigation. The parties have not presented any hard evidence concerning the relative costs of litigation in Alaska versus the Western District of Washington. In determining this factor, the court must take into consideration the costs to be incurred to obtain the presence of willing witnesses. In this case, it is undisputed that a major component of the costs of litigation (other than attorney's fees) will be the cost of transporting witnesses to the place of trial, be it in Juneau, Alaska, or Seattle or Tacoma, Washington. Eric will incur additional costs in transporting witnesses from the Seattle — Tacoma area if this action is tried in Juneau. Kubley, on the other hand, will incur additional costs if forced to transport his Alaska witnesses to Seattle — Tacoma. The parties have identified witnesses that would have to be transported if the case were transferred (Kubley) or retained (Eric). The precise number of witnesses that would have to be transported by each is impossible to determine with any degree of certainty. First, neither party has provided the court with complete numbers of the witnesses expected to be called. Second, and perhaps more importantly, as noted, above, the relevance of the testimony to the substantive issues in this case, or admissibility under the hearsay rule, of several of the identified witnesses is questionable. Finally, also as noted above, Kubley erroneously assumed this court had jurisdiction over All-American. Kubley will by necessity be forced to resort to evidence within the control of All-American, a non-party, to prove the full measure of the damages claimed. It is, therefore, entirely possible, if not probable, that the cost to Kubley of litigating may be higher in this district than if the action is transferred to the Western District of Washington. Neither party has argued and this court cannot conceive that the costs of litigating this case in a federal court in the Western District of Washington — other than the costs of producing witnesses — would differ to any significant degree from the cost of litigating in this court sitting in Juneau, Alaska. This factor, if not neutral, slightly favors transfer to the Western District of Washington.
7. Availability of Compulsory Process. The transfer being from one U.S. District Court to another, the rules governing and availability of process to compel the attendance of unwilling non-party witnesses as a matter of law are identical. Kubley has identified several witnesses in Alaska (most, if not all, presumably in the greater Juneau area), while Eric has identified several witnesses in Washington (presumably most, if not all, within 100 miles of the Seattle — Tacoma area). Consequently, neither party will be able to compel the attendance of an unwilling witness to appear at trial held other than in the state in which the witness resides. Analyzing and weighing this factor, as with the preceding factor, is complicated by the lack of jurisdiction over All-American. The extent to which Kubley will be required to call witnesses associated with All-American is an unknown; accordingly, the impact of the lack of ability to compel attendance of those witnesses in this district, not having been explored or argued by the parties, cannot be definitively determined. Consequently, the number of non-party witnesses that each side must call in order to establish the facts relevant to the prosecution and defense of this action cannot be ascertained. This renders it impossible for the court to weigh the relative burdens imposed on the parties whether this case is retained in this district or transferred to the Western District of Washington. Based on the limited evidence before the court, this factor must also be considered as either being neutral or, perhaps, slightly favoring transfer to the Western District of Washington.
8. Access to Proof. Other than Eric, who resides in Pennsylvania, the majority of, if not all, the witnesses and non-testimonial evidence relevant to this case appears to be physically located in either Alaska (Juneau area) or Washington (Tumwater). Discovery of and access to both witnesses and non-testimonial evidence is governed by federal law, which is the same in this court and the Western District of Washington. Irrespective of the place of trial, each party will have equal access to that evidence pretrial. Indeed, given the lack of jurisdiction in this court over All-American, Kubley may very well improve his access to the evidence controlled by All-American if this case is transferred to the Western District of Washington.
This issue has not been fairly raised in either the moving papers or the opposition. The issue not having been fully briefed, this court is neither ruling nor expressing an opinion as to the substantive law to be applied. That issue must await such time as it is properly presented to the court.
See, e.g., Ravelo Monegro v. Rosa, 211 F.3d 509, 512 (9th Cir. 2000).
This factor is also either neutral or, perhaps, tips slightly in favor of transfer.
9. Forum Selection Clause. This factor is nonexistent and, therefore, neutral.
10. Public Policy of Forum. Kubley has not identified and this court is unable to ascertain that any strong public policy of Alaska would be implicated by the transfer of this case to the Western District of Washington. Kubley's sole objection on this factor concerned the admissibility of the tapes, which as discussed above, is not governed by Alaska law in any event. This factor is, therefore, also neutral.
Moreover, a transfer under § 1404(a) simply changes the place of the trial; the substantive law of the transferee court still applies. Ferens v. John Deere Co., 494 U.S. 516, 424-27 (1990).
Of the ten factors, four are neutral, favoring neither a transfer to the Western District of Washington nor retention by this court. Of the remaining five, only one, plaintiff's choice of a forum, clearly supports retention in this district. Two, the parties respective contacts with the fora and contacts in Alaska related to the claim favor transfer. The remaining three, the differences in the cost of litigating, the availability of compelled attendance of witnesses, and access to proof are either neutral or slightly favor transfer to the Western District of Washington.
In addition to the factors evaluated above, the court considers two other factors which in this case are important considerations. The first is the lack of jurisdiction over All-American. For Kubley to pursue his action against All-American, he will have to file a separate suit in a jurisdiction which has jurisdiction over All-American. It appears that he could file that suit in Washington. If he litigates against Eric in Alaska and All-American in Washington, the result could go beyond increased litigation costs, for there is the possibility of inconsistent results that would deny Kubley a full recovery. Second, the thinness of the reed on which this court's jurisdiction over L. Eric Whetstone rests, in particular the nexus between Eric's contacts with Alaska and Kubley's claim, should not be overlooked. In the motion at bar, Kubley was only required to make a prima facie showing; at trial he must establish that all three prongs of the specific in personam jurisdiction test apply by a preponderance of the evidence. The necessary nexus between Eric's contacts and the claims rests principally on tying the contacts related to the Alaska projects that did not come to fruition to the Tumwater facility, which in turn rests on a determination that there was but a single agreement covering all potential water bottling facilities, not two; one covering Alaska and a second dealing with the others. There is a realistic possibility that Eric will be unable to sustain the "single agreement" theory by a preponderance of the evidence. In that event, this court would lack jurisdiction and all would be for naught.
Thus, it appears that for the convenience of the parties, including plaintiff, and in the interest of justice to all parties, this action as against L. Eric Whetstone ought to be transferred to the Western District of Washington. Of course, this court may only transfer a case under § 1404(a) if the case could have been brought in the transferee court. This requires the transferee court to have (1) subject matter jurisdiction; (2) personal jurisdiction over the parties; and (3) to be a proper venue. The basis for subject matter jurisdiction in the district court in the Western District of Washington is the same as it is in this court: diversity. Transfer of this case will not affect that jurisdictional base. The evidence in the record is clear that under the specific in personam jurisdiction test applicable in this case, the exercise of in personam jurisdiction over Eric in the Western District of Washington rests on a much stronger footing than it does in this district. Finally, a substantial part of the events or omissions giving rise to the claims asserted by Kubley occurred in the Western District of Washington, making venue proper in that district.
Hoffman v. Blaski, 363 U.S. 335, 343-44 (1960).
The requirements for a transfer of this case to the Western District of Washington under § 1404(a) have been met.
VII. DISPOSITION
Defendants' motion seeks dismissal of the action for want of in personam jurisdiction or, in the alternative, in the event that the court finds jurisdiction is proper, that the action be transferred to the Western District of Washington. The court has determined it lacks in personam jurisdiction over Ilona Whetstone and All-American Bottled Water Corporation, but that the exercise of in personam jurisdiction over L. Eric Whetstone is proper. The court has further determined that for convenience of the parties and in the interests of justice, the action as to Eric ought to be transferred to the Western District of Washington. Given these holdings, it might appear that the claims against both Ilona and All-American should be dismissed without prejudice while the remaining claim against Eric is transferred to the Western District of Washington. However, for the reasons noted below, the court instead will dismiss, without prejudice, the claims against Ilona only and transfer the claims against Eric and All-American to the Western District of Washington.
Section 1631 of Title 28 provides the following:
Whenever a civil action is filed in a court as defined in section 610 of this title or an appeal, including a petition for review of administrative action, is noticed for or filed with such a court and that court finds that there is a want of jurisdiction, the court shall, if it is in the interest of justice, transfer such action or appeal to any other such court in which the action or appeal could have been brought at the time it was filed or noticed, and the action or appeal shall proceed as if it had been filed in or noticed for the court to which it is transferred on the date upon which it was actually filed in or noticed for the court from which it is transferred.
Transfer is appropriate under § 1631 if three conditions are met: (1) the transferring court lacks jurisdiction; (2) the transferee court could have exercised jurisdiction at the time the action was filed; and (3) the transfer is in the interest of justice. "Normally transfer will be in the interest of justice because normally dismissal of an action that could be brought elsewhere is `time consuming and justice-defeating.'" Because the statute's language is mandatory, the court should consider transfer sua sponte.
Cruz-Aguilera v. Immigration and Naturalization Service, 245 F.3d 1070, 1074 (9th Cir. 2001).
Miller v. Hambrick, 905 F.2d 259, 262 (9th Cir. 1990) (quoting Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467 (1962)).
Cruz-Aguilera v. Immigration and Naturalization Service, supra.
Dismissal of All-American and the transfer of the claims against Eric to the Western District of Washington would require Kubley to obtain leave to amend the complaint subsequent to transfer to join All-American as a defendant. To impose such a requirement is not in the interests of justice and judicial efficiency. All-American is clearly subject to in personam jurisdiction in the Western District of Washington.
See, e.g., Arreola-Arreola v. Ashcroft, 383 F.3d 956, 965 (9th Cir. 2004) ("[f]urthermore, transfer of this case would serve the interests of justice by preventing unnecessary delay by requiring Arreola to re-file in the district court").
Although it is clear that the exercise of in personam jurisdiction over All-American by a Washington court is proper, the record in this case does not support the exercise of in personam jurisdiction over Ilona in Washington. Unlike Eric, Ilona has not personally engaged in any activity in Washington. For the same reasons that in personam jurisdiction was lacking in this court, it would be lacking in Washington; therefore, a transfer to a court in that state would be improper. In the unlikely event that Kubley finds facts (none appear in the record before this court) that would establish in personam jurisdiction over Ilona in Washington, and he can state a claim upon which relief may be granted against her (doubtful), he may seek leave to amend his complaint in the Western District of Washington.
For the reasons above, the court will dismiss the claims against Ilona Whetstone and transfer the case against L. Eric Whetstone and All-American to the Western District of Washington. The transfer as to L. Eric Whetstone will be made under § 1404(a) upon the motion of L. Eric Whetstone and the transfer as to All-American Bottled Water Corporation will be made sua sponte under § 1631.
VIII. CONCLUSION
The motion at docket 17 is DENIED as moot, because the amended complaint is already properly of record. The motion at docket 7 is DENIED in part and GRANTED in part, and the court exercises its discretion pursuant to 28 U.S.C. § 1631 as follows:
(1) The claims against Ilona Whetstone are DISMISSED, without prejudice.
(2) Pursuant to Rule 54(b), the Clerk of Court is directed to enter a judgment dismissing plaintiff's claims against defendant Ilona Whetstone without prejudice.
(3) After the judgment is entered, the Clerk of Court is directed to transfer plaintiff's remaining claims (those against L. Eric Whetstone and All American Bottled Water Corporation) to the United States District Court for the Western District of Washington for all further proceedings.