Opinion
Civil Action No: 99-3717, Section: "D"(3).
July 12, 2000.
MINUTE ENTRY
Before the court is the "Motion to Dismiss for Lack of Personal Jurisdiction" filed by Defendant, The Johns Hopkins University (Johns Hopkins). Plaintiffs, Dr. Gholam A. Peyman and Dr. Bahram Khoobehi, filed a memorandum in opposition. The court heard oral argument from counsel on Wednesday, July 12, 2000.
Having considered the memoranda and argument of counsel and the applicable law, the court finds that the motion should be denied.
I. Background
In this matter, Plaintiffs sue Defendant Johns Hopkins over a Patent Assignment Agreement. In 1990, Plaintiffs (Drs. Peyman and Khoobehi) together with a third doctor (Dr. Zeimer), obtained a patent entitled "Systems for Selective Release of Liposome Encapsulated Material via Laser Radiation" for technology they invented while at the University of Illinois. Plaintiffs subsequently moved to New Orleans to work at the LSU Eye Center of the Louisiana State University Medical School, and Dr. Zeimer began working for Johns Hopkins.
In June 1994, Johns Hopkins wrote Plaintiffs, soliciting and obtaining their signatures on the subject Patent Assignment Agreement. In November 1996, Plaintiffs agreed to extend the term of the Assignment agreement for an additional two years, or until November 1998. In November 1998, Johns Hopkins wrote Plaintiffs, soliciting and procuring yet another extension of the Assignment Agreement. The Plaintiffs did not initiate the contacts with Johns Hopkins in 1994, 1996, and 1998, and when Plaintiffs signed the agreement or extension, they did so in New Orleans, and mailed the signed document to Johns Hopkins by mail.
Plaintiffs allege that prior to the 1998 extension, Johns Hopkins (without disclosure to Plaintiffs) negotiated with Photovision, Inc. to enter into a License Agreement regarding the patent. In February 1999, Johns Hopkins and Photovision entered into a License Agreement, which Plaintiffs first learned about in May 1999.
In this suit, Plaintiffs claim that Johns Hopkins "intentionally, negligently and wrongfully failed to disclose the negotiations with Photovision to Peyman and Khoobehi in order to obtain further renewal of the Licensing Agreement with Peyman and Khoobehi without paying any additional consideration to Peyman and Khoobehi." (Complaint, ¶ 22). Plaintiffs further claim that Johns Hopkins "has benefited from the License Agreement with Photovision and has failed to pay royalties to [them] pursuant to the Assignment Agreement." (Complaint, ¶ 23).
At all relevant times, Plaintiffs resided and maintained their places of employment in Louisiana. Johns Hopkins is a non-profit corporation organized under the laws of Maryland, with its principal place of business in Baltimore, Maryland. However, Johns Hopkins has been registered to do business in Louisiana since 1998; it sends a recruiter to Louisiana every year to recruit students; it has an alumni chapter which hosts an event every three or four years; the alumni in Louisiana raised $42,536 for the years 1998-2000; and it maintains an inter-active website.
Not only does the website advertise to prospective students and solicit contributions from alumni, it also includes web pages published by Johns Hopkins' Office of Technology Licensing (OTL) which is the arm of Johns Hopkins which solicited the Plaintiffs. (See Plaintiffs' Exhibits D-G)
Defendant Johns Hopkins now argues that the court lacks personal jurisdiction over it.
II. Legal Analysis
When a nonresident defendant challenges personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the defendant. Mink v. AAAA Development LLC, 190 F.3d 333, 335 (5th Cir. 1999). However, when the district court decides a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, it is not necessary for the plaintiff to "establish personal jurisdiction by a preponderance of the evidence; prima facie evidence of personal jurisdiction is sufficient." Kelly v. Syria Shell Petroleum Development B.V., ___ F.3d ___, 2000 WL 708461 (5th Cir. 2000) (citation omitted).
Further, the court accepts plaintiff's "uncontroverted allegations, and resolve in [plaintiff's] favor all conflicts between the facts contained in the parties' affidavits and other documentation." Id.
Here, sitting in diversity, this court may exercise jurisdiction over the non-resident Defendant Johns Hopkins if:
(1) the long-arm statute of Louisiana confers personal jurisdiction over Johns Hopkins; and
(2) the exercise of such jurisdiction by Louisiana is consistent with due process under the United States Constitution.Id.
Because Louisiana's long-arm statute has been interpreted to extend to the limits of due process, the court need only determine whether subjecting Johns Hopkins to suit in Louisiana would be consistent with the Due Process Clause of the Fourteenth Amendment. Guidry v. U.S. Tobacco Co., Inc., 188 F.3d 619, 624 (5th Cir. 1999)
The due process inquiry requires a determination of two factors:
(1) whether or not Johns Hopkins has purposefully availed itself of the benefits and protections of Louisiana by establishing "minimum contacts" with Louisiana; and
(2) whether the exercise of jurisdiction over Johns Hopkins offends "traditional notions of fair play and substantial justice."Mink, 190 F.3d at 336.
A. Minimum Contacts?
"Minimum contacts" can be established through "contacts that give rise to 'specific' personal jurisdiction or those that give rise to 'general' personal jurisdiction." Id.
Specific jurisdiction exists [if Johns Hopkins' contacts with Louisiana] arise from, or are directly related to, the cause of action.
General jurisdiction exists [if Johns Hopkins' contacts with Louisiana] are unrelated to the cause of action but are "continuous and systematic."Id. (bold added, citations omitted)
Under the facts and circumstances presented here, the court finds that Johns Hopkins purposefully solicited and procured the subject Patent Assignment Agreement and the two extensions from Plaintiffs (living and working in Louisiana). When the last extension was procured in November 1998, Johns Hopkins was actually registered to do business in Louisiana. The Patent Assignment Agreement (and its two extensions) involved a long-term relationship between Plaintiffs and Johns Hopkins with continuing obligations set forth, and it is the subject of this lawsuit.
In Stuart v. Spademan, 772 F.2d 1185 (5th Cir. 1985), the Fifth Circuit held chat the negotiations and execution of a patent assignment agreement between parties in two states was insufficient to establish specific jurisdiction over the defendant. Defendant Johns Hopkins makes a good argument that factually Stuart is "almost identical" to this case. (Defendant's Memo. at 2) However, this court finds it significant that, unlike the Plaintiffs in Stuart who initiated contact with the non-resident defendant, the Plaintiffs here were unilaterally targeted by Johns Hopkins (through telephone calls and/or letters) not only on the initial agreement (in 1994) but also on the two subsequent extensions (in 1996 and 1998). When Johns Hopkins pursued the third extension in 1998, it had been licensed to do business in Louisiana for several months (unlike the individual defendant in Stuart who apparently was never licensed to do business in the forum state).
The unilateral activity of those who claim some relationship with a nonresident defendant . . . cannot satisfy the requirement of contact with the forum state. Stuart, 772 F.2d at 1190.
Johns Hopkins submitted the Affidavit of Estelle A. Fishbein, Vice President and General Counsel of Johns Hopkins, who attested in part that "[t]he assignment agreement at issue in this case was negotiated via telephone." (Fishbein Affidavit, ¶ 4). Plaintiffs have attested in their Affidavits that Johns Hopkins mailed them letters in Louisiana regarding the assignment agreement and the two extensions.
Further, the terms of the agreement between Johns Hopkins and Plaintiffs set forth continuing relationships and obligations of the parties, with the possibility of substantial benefits flowing out of the agreement. Simply put, the relationship between Plaintiffs and Johns Hopkins was not a "one-shot affair." While merely entering into a contract, without more1 does little to establish minimum contacts, here Johns Hopkins deliberately set into motion an ongoing relationship with the Louisiana Plaintiffs, and it should have reasonably foreseen that doing so would have consequences in Louisiana.
[W]ith respect to interstate contractual obligations, [the Court has] emphasized that parties who reach out beyond one state and create continuing relationships with citizens of another state' are subject to regulations and sanctions for the consequences of their activities. Burger King Corp. v Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 2182, 85 L.Ed.2d 528 (1985) (citation omitted).
If a defendant has refrained from physically entering the forum state, that is not of itself sufficient to avoid jurisdiction is a substantial connection otherwise exists. Burger King, 105 S.Ct. at 2184.
Finally, in Stuart, there was a question as to which party (Plaintiffs or Defendant) was really the aggrieved party. Here, two physician residents of Louisiana claim that they are aggrieved by the non-resident Johns Hopkins' alleged breach of a contract, which again Johns Hopkins had deliberately and successfully entered into and twice extended with Plaintiffs. It would be unfair to allow individuals who purposefully engage in interstate activities for profit to escape having to account in other states for the proximate consequences of those activities.
Accordingly, the court concludes that Johns Hopkins purposefully availed itself of the rights and benefits of doing business in Louisiana and the court may exercise personal jurisdiction over Johns Hopkins based on "specific" jurisdiction. Johns Hopkins' contacts with the Louisiana Plaintiffs were deliberate, rather than fortuitous, so that the possible need to invoke the benefits and protections of Louisiana's laws was reasonably foreseeable, rather than a surprise.
The court also finds that, even if Johns Hopkins' contacts with Louisiana are insufficiently related to the Plaintiffs' cause of action for the exercise of specific personal jurisdiction, Johns Hopkins nevertheless has sufficiently "continuous and systematic" contacts with Louisiana to allow this court to reasonably exercise "general" personal jurisdiction over Johns Hopkins. Johns Hopkins solicits business and donations from Louisiana residents (through recruitment efforts, alumni involvement, advertisement in Louisiana publications and its large website). Further, it targets the development of its technology licensing as part of its web-site. While a number of these Louisiana contacts are independent of one another, they occur with sufficient frequency to make them "continuous and systematic".
In Minks, the Fifth Circuit addressed the issue of whether personal "general" jurisdiction could be exercised over a defendant who operates an Internet website without other contacts with the forum state. The Court looked to the "nature and quality of commercial activity that an entity conducts over the Internet" and categorized Internet use "into a spectrum of three areas". Mink, 190 F.3d at 336.
At the one end of the spectrum, there are situations where a defendant clearly does business over the Internet by entering into contracts with residents of other states which "involve the knowing and repeated transmission of computer files over the Internet. . . ." In this situation, personal jurisdiction is proper.
At the other end of the spectrum, there are situations where a defendant merely establishes a passive website that does nothing more than advertise on the Internet. With passive websites, personal jurisdiction is not appropriate.
In the middle of the spectrum, there are situations where a defendant has a website that allows a user to exchange information with a host computer. In this middle ground, "the exercise of jurisdiction is determined by the level of interactivity and commercial nature of the exchange of information that occurs on the Website."Id. (citations omitted)
Under the facts presented here, the court finds that while there has been no showing that contracts are entered into over the Johns Hopkins' website, the website is more than passive advertisement. It offers a means of transferring information, recruiting students, receiving donations from alumni, and soliciting and conducting business. As such, the Johns Hopkins' website has a sufficient level of interactivity and commercial nature to place it in the middle range of the sliding scale articulated in Mink.
Finally, since 1998, Johns Hopkins has been registered to do business in Louisiana. By obtaining a certificate to do business in Louisiana, Johns Hopkins has the authority to transact business in the state, and "to enjoy the same, but no greater, rights and privileges as a business or nonprofit corporation organized under the laws of this state." LSA-R.S. 12 :306(2). Further, Johns Hopkins is also "subject to the same duties, restrictions, penalties and liabilities imposed . . . upon a business or nonprofit corporation of like character organized under the laws of this state." LSA-R.S. 12:306(3).
In Wenche Siemer v. Learjet Acquisition Corp., 966 F.2d 179, 181-82 (5th Cir. 1992), the Fifth Circuit found that the appointment of an agent for process and the registration to do business within the state, without more, failed to satisfy the criteria for the exercise of general jurisdiction. However, this case presents "more". Not only is Johns Hopkins registered to do business in Louisiana, it purposefully initiated contact with Plaintiffs to enter a Patent Assignment Agreement (in 1994), and thereafter purposefully sought and obtained two extensions of this Agreement (in 1996 and 1998). Further, as previously discussed, Johns Hopkins solicits other business and donations from Louisiana students, and it targets the development of its technology licensing as part of its interactive website.
B. Reasonableness?
The second prong of the due process analysis asks whether it would be fair, just and reasonable to require Johns Hopkins to defend itself in this Louisiana court, for the imposition of jurisdiction must not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 666 S.Ct. 154, 158, 90 L.Ed.2d (1945).
"[W]here a defendant who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Most such considerations usually may be accommodated through means short of finding jurisdiction unconstitutional." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S.Ct. 2174, 2184-85, 85 L.Ed.2d 528 (1985).
Here, the court finds that Johns Hopkins' purposeful, rather than fortuitous, contacts with Plaintiffs in Louisiana make it reasonable and fair to require Johns Hopkins to defend this suit in Louisiana. Further, Louisiana has a "'legitimate interest in holding [Johns Hopkins] answerable on a claim related to' the contacts [Johns Hopkins] established in [Louisiana]." Id., 471 U.S. at 482-83, 105 S.Ct. at 2187. Finally, Johns Hopkins has made an insufficient showing that it will be prejudiced by having this suit tried here.
With the "increasing nationalization of commerce" and "modern transportation and communication", there is less perceived need today for the federal constitution to protect a defendant from "inconvenient litigation" because all but the most remote forums are easily accessible for the pursuit of both business and litigation. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 293, 100 S.Ct. 559, 565, 62 L.Ed.2d 490 (1980).
While it may be somewhat burdensome for Johns Hopkins to defend this suit in Louisiana, Johns Hopkins knew when it entered into and twice extended the assignment agreement, that it was making a connection with Louisiana, presumably hoping that the connection would work to Johns Hopkins' benefit. On the flip side, a party as sophisticated as Johns Hopkins could reasonably expect that a dispute with such an agreement would spawn litigation in Louisiana.
III. Conclusion
For reasons set forth above, the court finds from a totality of the circumstances that Johns Hopkins had "fair warning" that its purposeful contact with Plaintiffs and Louisiana may subject it to the jurisdiction of this Louisiana court.
Accordingly;
IT IS ORDERED that Defendant Johns Hopkins' "Motion to Dismiss for Lack of Personal Jurisdiction" be and is hereby DENIED.