Carruthers Equipment Company v. Magurit Gefrierschneider GmbH

Full title: CARRUTHERS EQUIPMENT COMPANY, an Oregon Corporation, Plaintiff v. MAGURIT…

Court: United States District Court, D. Oregon

Date published: Nov 27, 2000

Civil No. 99-142-KI (D. Or. Nov. 27, 2000)

Opinion

Civil No. 99-142-KI

November 27, 2000

Christopher C.S. Blattner, Robert W. Nunn, Portland, Oregon, Attorneys for Plaintiff.

Dana R. Taylor, Aaron K. Stuckey, Portland, Oregon, Attorneys for Defendant.

OPINION

Garr M. KING, U.S.D.J.

Plaintiff Carruthers Equipment Company ("Carruthers") and defendant Magurit Gefrierschneider GmbH ("Magurit") both manufacture meat slicing equipment. Carruthers alleges that Magurit breached provisions prohibiting copying in a consignment agreement between the two companies. Before the court is Magurit's motion to dismiss for lack of personal jurisdiction (#12).

FACTS

Carruthers' principal place of business is in Warrenton, Oregon. Magurit is located in Germany. It has no office or agents in Oregon.

In 1989, Jurgen Hager, managing director of Magurit, approached Gary Wygal, president of Carruthers, at a European trade show about a possible representative relationship. Hager disagrees and states that Carruthers first approached Magurit unsolicited but Hager does not give details of where or when this occurred.

In March 1990, Carruthers faxed Magurit to ask if it was interested in representing Carruthers in Germany and the Middle East. Magurit responded that it was overcommitted at the time and could not do so. By November 1990, however, Magurit contacted Carruthers and stated that it was now ready to cooperate.

In late 1990 and early 1991, Wygal and Hager negotiated the consignment agreement which is at issue in this case. Roy Newman, an agent for Carruthers living in England, was also involved. The agreement was prepared at Carruthers' office in Oregon and faxed on February 8, 1991, by Newman in England to Hager in Germany for his signature. Hager executed the agreement and returned it to Newman, in England, who signed it. The agreement was then sent to Oregon and signed by Wygal. Wygal states that Newman did not have the authority to bind Carruthers. The consignment was for a period of 90 days after the receipt of the machine. Several faxes were exchanged between Oregon and Germany between 1990 and 1993.

Carruthers had previously consigned Auto Slicer No. 22 to a Swiss company, Scheibler. On June 20, 1991, Carruthers asked Scheibler to send Auto Slicer No. 22 from Scheibler's facility in Switzerland to Magurit in Germany. Magurit asked to delay delivery of the machine to either late May, early June, or late August 1991. Auto Slicer No. 22 arrived at Magurit approximately July 9, 1991. Hager was annoyed that the machine did not come directly from the factory in Oregon. In October 1991, Magurit shipped Auto Slicer No. 22 to a European trade show. Because of staff shortages and priorities for both companies, no training was done in Germany or elsewhere for Magurit on the Auto Slicer. On November 11, 1991, Carruthers wrote Magurit stating that it had concluded based on Magurit's lack of interest at the trade show that the company was not interested in representing Carruthers in Germany. Carruthers declared the agreement null and void.

Fred Kobema was president and sole shareholder of an American corporation, located in Valparaiso, Indiana, which he named Magurit of America. Koberna marketed food processing equipment for various manufacturers, including both Magurit and Carruthers. Kobema had an exclusive sales consulting agreement with Magurit from October 1, 1988, until some point in 1990. Even though Koberna considered himself an independent operator after that time, and stated so in some faxes, he continued to use the name Magurit of America. During 1990, Koberna was trying to become a Carruthers sales representative. He worked with the company in showing its equipment and referring business to it.

Koberna reserved a booth for the October 1991 AMI Trade Show in Chicago. During the fall of 1991, Koberna invited both Magurit and Carruthers to display equipment in his booth. Both companies accepted his offer and sent equipment and personnel to staff the booth. Several faxes were exchanged between Koberna in Indiana and Carruthers in Oregon. Kobema never saw a Magurit representative operate or display the Carruthers' machine at the show. In November 1991, Carruthers hired Koberna as a sales representative.

Peter Johnson, vice president of sales and marketing for Carruthers, sees Kobema's role differently. Johnson states that Koberna contacted Carruthers in mid-1990, stated that he was a sales representative for Magurit, and explained that Magurit wished to expand its product line to include machines for fresh meat, such as the Carruthers product. Johnson attended AMI on behalf of Carruthers. He states that he spent substantial time explaining the functions of the Carruthers machine to the Magurit representative.

LEGAL STANDARDS

The plaintiff bears the burden of establishing that the court has personal jurisdiction over the defendant. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990). If no evidentiary hearing is held, a plaintiff can withstand a motion to dismiss by making a prima facie showing of jurisdictional facts which, if true, support jurisdiction over the defendant. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995). Allegations in the complaint must be taken as true and conflicts between the facts must be resolved in the plaintiff's favor for purposes of deciding whether a prima facie case for personal jurisdiction exists.American Tel. Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir.), opinion supplemented on another grounds, 95 F.3d 1156 (9th Cir. 1996).

DISCUSSION

I. Objection to Evidence

Carruthers objects to Exhibits 1.45 and 1.46 submitted by Magurit, both of which relate to the deposition of Urs Scheibler taken in Switzerland. No verbatim transcript or recording was made. Scheibler was not sworn by the judge because it was not customary in the local practice. The exhibit is a translation of handwritten notes taken by the judge's clerk during the deposition. Questions are not included, the answers are not in full, and all exchanges between the judge, Scheibler, and the attorneys are not included. The deposition was conducted in German without an interpreter. The judge limited cross examination of Scheibler by Carruthers. Based on these circumstances, Carruthers seeks to have the exhibits excluded.

Although it is doubtful that I would allow the evidence in light of the circumstances under which the deposition was taken, I have reviewed it and concluded that the information is not relevant to the question before me. Much of it is also in faxes which were filed. Thus, the objection is moot.

II. Personal Jurisdiction

The jurisdictional reach of the federal court over defendants in a diversity action is determined by the law of the forum state. Oregon extends jurisdiction to the outer limits permitted by the state or federal constitutions. ORCP 4L. Thus, I can turn to a federal due process analysis. Gray Co. v. Firstenberg Mach. Co., 913 F.2d 758, 760 (9th Cir. 1990). Federal due process requires that a nonresident defendant have minimum contacts with the forum state such that the exercise of personal jurisdiction does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). The constitutional due process test may be satisfied by a finding of either general or specific jurisdiction. Sher, 911 F.2d at 1361. When a defendant has "substantial" or "continuous and systematic" contacts with the forum state, general jurisdiction is proper even if the cause of action is unrelated to the defendant's forum activities. Id. Here, Carruthers does not contend that general jurisdiction exists.

When general jurisdiction is inappropriate, the Ninth Circuit has recognized application of a three-part test to determine whether specific jurisdiction exists:

(1) The nonresident defendant must do some act or consummate some transaction with the forum 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 results from the defendant's forum-related activities. (3) Exercise of jurisdiction must be reasonable.

Gordy v. Daily News. L.P., 95 F.3d 829, 831-32 (9th Cir. 1996).

The first element ensures that a "`defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.'" Id. at 832 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). The connection between defendant and the forum state must come about "by an action of the Defendant purposefully directed toward the forum State." Asahi Metal Indus. v. Superior Court of Cal., 480 U.S. 102, 112 (1987) (emphasis in original).

Although contacts that are isolated or sporadic may support specific jurisdiction if they create a substantial connection with the forum, the contacts must be more than random, fortuitous, or attenuated. Burger King v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174 (1985). A defendant need not be physically present within the forum, provided its efforts are purposefully directed toward forum residents. Id. at 476. However, contacts resulting from the unilateral activity of another party or third person are not attributable to a defendant. Id. at 475 n. 17. With respect to a contract entered into with a forum corporation, prior negotiations and contemplated future consequences, along with the terms of the contract and the parties actual course of dealings are the factors to be considered. Id. at 479.

Generally, the use of mail, telephone, or other international communications do not qualify as purposeful activity invoking the benefits and protection of the forum. Roth v. Garcia Marquez, 942 F.2d 617, 622 (9th Cir. 1991) (in contract negotiation). Future consequences of the contract must also be considered. In Roth, the court held that plaintiffs satisfied the purposeful availment prong of the test based on evidence that the editing, production work, and advertising for the movie would take place in the forum, even though the movie would be shot overseas.Id.

The parties exchanged several faxes prior to the execution of the consignment agreement. Although the agreement is for a term of 90 days, the parties would not have entered into it unless they contemplated a longer term relationship to result from the initial contact. Although the contacts are slim, I conclude that Magurit purposely availed itself of the privilege of doing business within Oregon, based on the Burger King and Roth factor of contemplated future consequences.

The Ninth Circuit uses a "but for" test to determine whether a particular claim arises out of forum-related activities. Ballard v. Savage, 65 F.3d 1495 (9th Cir. 1995) (but for defendant's contacts with California, would plaintiff's claims against defendant have arisen?). The focus is a broad one, analyzing whether the entire course of events was made possible by defendant's contacts in the forum state.

That factor is satisfied here. Carruthers would have no claim against Magurit without the consignment agreement.

Seven factors are relevant to the determination of the reasonableness of the exercise of jurisdiction:

1) the extent of the defendant's purposeful interjection into the forum state's affairs; 2) the burden on the defendant; 3) conflicts of law between the forum and defendant's home jurisdiction; 4) the forum's interest in adjudicating the dispute; 5) the most efficient judicial resolution of the dispute; 6) the plaintiffs interest in convenient and effective relief; and 7) the existence of an alternative forum.

Roth v. Garcia Marquez, 942 F.2d 617, 623 (9th Cir. 1991). No factor is dispositive; the court must balance all seven. Gordy, 95 F.3d at 836. If the requisite minimum contacts exist and the claim arises out of them, the burden is on the defendant to present a "compelling case" that jurisdiction would be unreasonable. Id. at 835.

Because I concluded above that the requisite contacts exist and the claim arises out of them, the burden is on Magurit to present a compelling case about the unreasonableness of jurisdiction in Oregon. As I mentioned above, the amount of Magurit's interjection into Oregon is limited. I know of no conflicts between the law in Oregon and Germany, the alternative forum. Both forums would have an equal interest in adjudicating this contract dispute. This case is unusual in that all discovery was completed prior to the parties wanting me to rule on this motion. Thus, I must conclude that although an overseas company would have more of a burden litigating than a local defendant, Magurit has born up well under the burden. Likewise, it would be very inefficient to require the parties to begin anew in another court system.

Weighing all of these factors, I conclude that Magurit has not presented a compelling case that jurisdiction would be unreasonable. Accordingly, Carruthers has made a prima facie showing of facts sufficient to support personal jurisdiction in this court.

CONCLUSION

Defendant's motion to dismiss for lack of personal jurisdiction (#12) is denied.

ORDER

Defendant's motion to dismiss for lack of personal jurisdiction (#12) is DENIED

IT IS SO ORDERED.