Diamond Crystal Brands, Inc. v. Food Movers International Inc.

593 F.3d 1249, 2010 U.S. App. LEXIS 786, 2010 WL 100965
CourtCourt of Appeals for the Eleventh Circuit
DecidedJanuary 13, 2010
Docket08-14782
StatusPublished
Cited by280 cases

This text of 593 F.3d 1249 (Diamond Crystal Brands, Inc. v. Food Movers International Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Diamond Crystal Brands, Inc. v. Food Movers International Inc., 593 F.3d 1249, 2010 U.S. App. LEXIS 786, 2010 WL 100965 (11th Cir. 2010).

Opinion

TJOFLAT, Circuit Judge:

This challenge to the district court’s exercise of personal jurisdiction over a nonresident defendant gives us occasion to revisit our jurisprudence regarding the Georgia Long-Arm Statute, O.C.G.A. § 9-10-91 (the “long-arm statute”), in light of recent pronouncements by the Georgia Supreme Court. Whereas we have previously understood the Georgia long-arm jurisdictional analysis to merge into a single, coextensive procedural due process analysis, the Georgia Supreme Court has since made clear the independent importance of the statute. In Innovative Clinical & Consulting Servs., LLC v. First Nat’l Bank of Ames, Iowa, 279 Ga. 672, 620 S.E.2d 352, 355-56 (2005), the Georgia Supreme Court held that a trial court must engage in a separate, literal application of the Georgia long-arm statute in addition to a due process inquiry in deciding whether personal jurisdiction exists over a nonresident defendant. We now conform the rule in this circuit to the state law as announced by the Georgia Supreme Court. Additionally, we conclude that although the district court may have erred in its analysis under this newly clarified standard, jurisdiction is proper under both the long-arm statute and the Due Process Clause of the Fourteenth Amendment. We affirm.

I.

This action was brought by Diamond Crystal Brands, Inc. and Diamond Crystal Sales, LLC (collectively “Diamond Crystal”) against Food Movers International, Inc. (“Food Movers”) alleging nonpayment for two shipments of Splenda Brand sweetener (“Splenda”). Diamond Crystal Brands, Inc., an international seller of sugar and other sweetening products, is a Delaware corporation that maintains a facility in Savannah, Georgia. Diamond Crystal Sales, LLC is a Delaware limited liability sales company qualified to do business in Georgia and is under common ownership with Diamond Crystal Brands. Food Movers is a food distribution company that purchases bulk food products from manufacturers for immediate resale to retail and other distributor customers. It is a California corporation with its sole place of business in Benicia, California. Food Movers has no offices, distribution centers, or personnel outside the state of California, and its employees do not travel outside of California to conduct business. 1

*1255 Food Movers’s business model is to purchase products from manufacturers, with the purchases sometimes being facilitated by outside food brokers, and then to quickly resell the products, usually before even taking delivery from the manufacturer, to its customers. Its customers then arrange for and accept delivery from the manufacturer and resell the products to their own customers or to the public.

In this ease, Diamond Crystal’s sales to Food Movers were facilitated by Nasser Company, Inc. (“Nasser”), a California-based food broker that markets Diamond Crystal’s products. Nasser first solicited the sales to Food Movers, and Nasser and Diamond Crystal Brands’s California-based region sales manager, Scott Seibel, traveled to Food Movers’s office in California to negotiate the terms of the sales. All of the negotiations took place either in person at Food Movers’s office in California or through telephone conversations between Food Movers and Nasser or Seibel, all of whom were in California.

As a result of these discussions, Food Movers submitted purchase orders to Nasser in California for the purchase of Diamond Crystal products. In all, from August 2005 to January 2006, Food Movers ordered bulk Splenda from Diamond Crystal, through Nasser, in fourteen transactions totaling more than $1.9 million. Diamond Crystal alleges that Food Movers failed to pay for two of these shipments, relating to purchases made on January 13 and 18, 2006, and therefore owes Diamond Crystal $288,111.60 plus prejudgment interest.

The terms and mechanics of the purchases included the following. Food Movers submitted its purchase or deis to Nasser in California. Immediately thereafter, Food Movers resold the product to its own third-party customers. Diamond Crystal and Food Movers agreed that Diamond Crystal would tender the product F.O.B. Savannah, 2 at its plant. 3 Diamond Crystal *1256 also invoiced Food Movers from its Savannah facility. Although the purchase orders specified “[c]ustomer pickup” and the bills of lading recorded delivery as having been taken “buy buyers [sic] truck,” Food Movers offered affidavit evidence that its personnel did not actually take delivery of the product from Diamond Crystal. 4 Instead, as the product had been resold to third-party customers of Food Movers by the time of tender by Diamond Crystal, those third-party customers took delivery of the product directly from Diamond Crystal. Accordingly, Food Movers never picked up the Splenda in Georgia. It did, however, send payments (for the shipments for which it paid), drawn on its California bank, by mail or wire transfer to Diamond Crystal in Georgia.

On February 28, 2007, Diamond Crystal filed this lawsuit, seeking the $288,111.60 Food Movers failed to pay, in the Superior Court of Chatham County, Georgia. Food Movers removed the action, on the basis of diversity jurisdiction, to the United States District Court for the Southern District of Georgia on March 22, 2007. On April 6, 2007, Food Movers moved to dismiss Diamond Crystal’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and submitted affidavit evidence in support of its challenge to the court’s jurisdiction. After full briefing, including the submission of counter-affidavits by Diamond Crystal, the district court denied the motion on August 3, 2007.

Food Movers subsequently answered the complaint, preserving its objection to personal jurisdiction and asserting counterclaims against Diamond Crystal for breach of contract, tortious and bad faith breach of contract, unfair trade practices, and deceptive trade practices in connection with Diamond Crystal and related companies’ decisions to stop selling Splenda and other products to Food Movers. 5

*1257 Food Movers later filed an amended answer and counterclaims asserting claims against Diamond Crystal for breach of contract and against Diamond Crystal and its corporate parent for “Unfair, Unlawful, Discriminatory, and Anti-Competitive Business Practices” in violation of California unfair competition and antitrust law and federal antitrust law. Food Movers admitted that it withheld payment on two of the Splenda purchase orders but denied that it owed Diamond Crystal any money due to Diamond Crystal’s alleged conduct implicated in the counterclaims.

On June 20, 2008, the district court granted Diamond Crystal judgment on the pleadings for its complaint and entered judgment on that order the same day.

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Bluebook (online)
593 F.3d 1249, 2010 U.S. App. LEXIS 786, 2010 WL 100965, Counsel Stack Legal Research, https://law.counselstack.com/opinion/diamond-crystal-brands-inc-v-food-movers-international-inc-ca11-2010.