NEA v. Eagle Electronics CV-95-528-M 09/30/96 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
NEA, Inc., Plaintiff,
v. Civil No. 95-528-M
Eagle Electronics, Inc., Defendant.
O R D E R
In this diversity action, the plaintiff. Northern
Electronics Association, Inc. ("NEA"), seeks $91,500 allegedly
owed to it by defendant. Eagle Electronics, Inc. ("Eagle"). The
amount claimed represents the combined value of products,
eguipment, and an outstanding invoice that were part of a
business relationship between NEA an Eagle. Eagle moves to
dismiss NEA's complaint pursuant to Fed. R. Civ. P. 12(b)(2)
asserting that this court lacks personal jurisdiction over it.
In the alternative. Eagle moves for a change of venue to
California. The motions are resolved as follows. BACKGROUND1
NEA is a New Hampshire corporation that sells and services
reconditioned electronic manufacturing equipment and parts,
including an "Amistar machine," which installs parts into printed
circuit boards. Eagle is a California corporation that serves as
a sales representative for manufacturers of electronic
manufacturing equipment. For several years, NEA did business
with Eagle through Carl Isemann, one of Eagle's two employees.2
NEA was particularly interested in Isemann because he could
service the Amistar machine. Eagle also served as NEA's non
exclusive west coast sales representative. In 1993, NEA and
Eagle agreed that Eagle would serve as NEA's exclusive west coast
sales representative and NEA also asked Eagle to assist in
establishing an NEA office in California. NEA leased office
space from Eagle in Valley Center, California, which was referred
to as "NEA West" on orders and in business correspondence. NEA
1 Consonant with the standard of review, the court accepts the plaintiff's properly supported factual statements as true. See Foster-Miller Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir. 1995).
2 The other Eagle employee is Pamela Isemann, who is referred to as the president of Eagle. Carl and Pamela Isemann are husband and wife.
2 shipped several Amistar machines to California to be held in
inventory at the west coast office.
In July 1993, when NEA was considering a large purchase of
used electronic parts and machines from a Massachusetts business,
Isemann came to New Hampshire to provide assistance. Isemann met
with NEA people in New Hampshire to discuss the purchase and then
travelled to Massachusetts to inspect the parts and machines.
Isemann returned to NEA in New Hampshire, and the decision to buy
the eguipment was based, in part, on Isemann's opinion. Isemann
used an NEA employee's car to pick up certain small items and
machines for NEA. The majority of the eguipment was trucked from
Massachusetts to NEA in New Hampshire, and Isemann assisted NEA
employees in the unloading process. Approximately ninety percent
of that purchase was then shipped to Isemann at Eagle in
California.
NEA hired Eagle to do all of its service work on Amistar
machines, and Isemann travelled to where the machines were
located to perform service. Isemann also came to NEA in New
Hampshire to help train an NEA customer on the Amistar machine.
When Isemann travelled to New England for electronics shows, he
would visit NEA headguarters in New Hampshire to discuss
3 business. All of Eagle's quotes for orders were processed
through the computer system at NEA in New Hampshire by modem.
At some point, the relationship between Eagle (Isemann) and
NEA soured, and a dispute developed over property that NEA
claimed Eagle refused to pay for or return to NEA. NEA brought
suit in Rockingham County (New Hampshire) Superior Court on
October 3, 1995, alleging that Eagle owed NEA an aggregate sum of
$91,500.00 for product NEA sent to Eagle for resale, the balance
owed on an outstanding invoice, and the value of two computers.
Eagle removed the case to this court on October 27, 1995, and now
moves to dismiss for lack of personal jurisdiction or for a
change of venue pursuant to 28 U.S.C.A. §1404 (a) .
A. Personal Jurisdiction
When a defendant moves to dismiss for lack of personal
jurisdiction. Federal Rule of Civil Procedure 12(b) (2), the
burden is on the plaintiff to prove that the forum state has
jurisdiction. Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir.
1995) . To carry the burden when there has been no evidentiary
hearing, the plaintiff must make a prima facie showing of
personal jurisdiction by submitting "evidence that, if credited,
is enough to support findings of all facts essential to personal
4 jurisdiction." Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675-
76 (1st Cir. 1992); accord Foster-Miller, Inc. v. Babcock &
Wilcox Canada, 46 F.3d 138, 145-46 (1st Cir. 1995) . The
plaintiff must go beyond the pleadings and "adduce evidence of
specific facts." Foster-Miller, 46 F.3d at 145. The court
accepts properly supported facts as true and construes disputed
facts most favorably to the plaintiff. Ticketmaster-New York,
Inc. v. Alioto, 26 F.3d 201, 203 (1st Cir. 1994). An evidentiary
hearing is necessary only if the court determines that it would
be unfair to the defendant to assert personal jurisdiction based
on only the plaintiff's prima facie showing. Foster-Miller, 46
F.3d at 145-46.
A federal court may assert personal jurisdiction over a
nonresident defendant in a diversity of citizenship case only if
the plaintiff establishes both that: (1) the forum state's long-
arm statute confers jurisdiction over the defendant, and (2) the
defendant has sufficient "minimum contacts" with the forum state
to ensure that the court's jurisdiction comports with the
reguirements of constitutional due process. Sawtelle, 70 F.3d at
13 87; Kowalski v. Doherty, Wallace, Pillsburv & Murphy, Attorneys
at Law, 787 F.2d 7, 8 (1st Cir. 1986).
5 1. New Hampshire's Long Arm Statute
As Eagle is a California corporation, the analysis begins
with New Hampshire's long-arm statute that applies to foreign
corporations. See N.H Rev. Stat. Ann. § 293-A:15.10 (Supp.
1995); see also McClarv v. Erie Engine & Mfg. Co., 856 F. Supp.
52, 55 (D.N.H. 1994). The New Hampshire corporate long-arm
statute has been interpreted "to authorize jurisdiction over
foreign corporations to the full extent allowed by federal law."
Id. Therefore, a finding of personal jurisdiction in this case
depends upon the constitutional standard.
2. The Constitutional Standard: Due Process
The Due Process Clause of the Fourteenth Amendment limits a
state's power to assert personal jurisdiction over nonresident
defendants. Helicopteros Nacionales De Colombia, S.A. v. Hall,
466 U.S. 408, 413-14 (1984) (citing Pennover v. Neff, 95 U.S. 714
(1877)). For the court to properly assert personal jurisdiction
over an absent nonresident defendant, the defendant must have had
"certain minimum contacts with [the forum] such that the
maintenance of the suit does not offend 'traditional notions of
fair play and substantial justice.'" Helicopteros, 466 U.S. at
414 (guoting International Shoe Co. v. Washington, 326 U.S. 310,
6 316 (194 5)); accord Burnham v. Superior Court of Cal., County of
Mann, 495 U.S. 604, 618 (1990). To satisfy this requirement, the
defendant's conduct should bear such a "substantial connection
with the forum [s]tate" that the defendant "should reasonably
anticipate being haled into court there." Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 473-75 (1985) (internal quotations
omitted).
The due process standard may be satisfied by the defendant's
general or specific contacts with the forum state. Pritzker v.
Yari, 42 F.3d 53, 59 (1st Cir. 1994). "General jurisdiction
exists when the litigation is not directly founded on the
defendant's forum-based contacts, but the defendant has
nevertheless engaged in continuous and systematic activity,
unrelated to the suit, in the forum state." Id. at 60 (quotation
omitted). Here, NEA has shown that Eagle, through Isemann, had
some business contact with NEA in New Hampshire, but has not
shown that Eagle had unrelated activities in New Hampshire that
were "continuous and systematic" as is necessary to support
general personal jurisdiction.
Specific personal jurisdiction depends upon the defendant's
contacts with the forum state that are directly related to the
litigation. United Elec. Workers v. 163 Pleasant Street Corp.,
7 960 F.2d 1080, 1088-89 (1st Cir. 1992). To determine whether
sufficient contacts exist to exercise specific personal
jurisdiction, the court uses a three-part test:
First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum state activities. Second, the defendant's in state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the gestalt factors, be reasonable.
Sawtelle, 70 F.3d at 1389 (citations and guotations omitted).
Each piece of the test depends on the facts presented in the
individual case "so that the task of " [d]ivining personal
jurisdiction is more an art than a science.'"Id. at 1388 (guoting
Ticketmaster, 26 F.3d at 206) .
a. Relatedness
To satisfy the first prong of the three-part test for
personal jurisdiction, plaintiff's claim must directly arise out
of or relate to the defendant's activities in the forum state.
Sawtelle, 70 F.3d at 1389. NEA's present action against Eagle is
to recover the value of property allegedly obtained by Eagle
during their business relationship when Eagle served as NEA's
exclusive sales representative on the west coast and Isemann
8 acted as NEA's service representative for Amistar machines.
Eagle acknowledges that NEA's suit arises out of the parties'
business agreement.
NEA represents that Eagle had contacts with New Hampshire,
through its employee Isemann, that are directly related to
Eagle's business with NEA. Isemann came to New Hampshire to
train an NEA customer in using the Amistar machine; to assist NEA
in its decision to make a large purchase of used parts and
machines and to transport the purchased eguipment back to NEA in
New Hampshire where it was subseguently shipped to Eagle in
California for sale; and to discuss other business. In addition.
Eagle's guotes for selling NEA products were processed through
NEA computers in New Hampshire. Although NEA has not traced the
exact property that is in dispute in the lawsuit to Isemann's
activities with NEA in New Hampshire, the connection is
sufficiently close to meet the prima facie standard of
relatedness.
b. Purposeful Availment
NEA also satisfies the purposeful availment reguirement of
specific jurisdiction. The purposeful availment prong consists
of two elements: foreseeability and voluntariness. Ticketmaster, 26 F.3d at 207. First, to be foreseeable, the
"defendant's 'conduct and connection with the forum State [must
be] such that he should reasonably anticipate being haled into
court there.'" Id. (quoting World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980)). Second, to be voluntary,
"jurisdiction may not rest on the 'unilateral activity of another
party or a third person" but instead Id. at 207-08 (quoting
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).
In this case. Eagle knew that it was dealing with a New
Hampshire corporation whose principal place of business was in
New Hampshire. Eagle's argument that it contracted with the
California division of a New Hampshire company is not supported
by the facts: the agreement itself is addressed to NEA in New
Hampshire, and NEA had no presence in California except through
Eagle. Through Isemann, Eagle participated in business decision
making with NEA in New Hampshire, assisted NEA in making a large
purchase of equipment, and processed all of its product quotes
for orders through New Hampshire. Eagle's contacts with New
Hampshire were intentional activities conducted to further its
business arrangement with NEA.
In addition, a defendant may anticipate being subject to
personal jurisdiction in a particular forum, even if it conducted
10 no business there, if the defendant intended its conduct to harm
the defendant in the forum state. See Calder v. Jones, 465 U.S.
783, 789 (1984); Hugel v. McNeil, 886 F.2d 1, 4 (1st Cir. 1989),
cert, denied, 494 U.S. 1079 (1990). Eagle was aware that if it
kept NEA's property and failed to pay for it, as NEA has alleged,
the injury would be felt by NEA in New Hampshire.
The record facts support a prima facie case that Eagle's
activities in New Hampshire were related to the NEA's suit and
that Eagle purposefully availed itself of the benefits of
Isemann's activities with NEA in New Hampshire knowing that
conduct harmful to NEA would injure it in New Hampshire.
c. The Gestalt Factors
Once the plaintiff has demonstrated a prima facie case that
satisfies both the relatedness and purposeful availment
reguirements, the court must consider the fairness of subjecting
a nonresident to jurisdiction in the forum state. Ticketmaster,
26 F.3d at 210. The fairness of asserting personal jurisdiction
is evaluated through the "gestalt" factors:
(1) the defendant's burden of appearing, (2) the forum state's interest in adjudicating the dispute, (3) the plaintiff's interest in obtaining convenient and effective relief, (4) the judicial system's interest in obtaining the most effective resolution of the
11 controversy, and (5) the common interests of all sovereigns in promoting substantive social policies.
Ticketmaster, 26 F.3d at 209 (citing Burger King, 471 U.S. at
477). The reasonableness of asserting jurisdiction over the
defendant in the forum state is determined on a sliding scale:
the weaker the plaintiff's showing on the relatedness and
purposeful availment prongs, the easier the job for the defendant
to show that jurisdiction would be unreasonable, and conversely
the stronger the plaintiff's case, the less likely jurisdiction
is unreasonable. Ticketmaster, 26 F.3d at 210. NEA's prima
facie showing on the first two prongs falls into middle ground
providing no advantage or disadvantage to Eagle in its effort to
show that jurisdiction here would be unreasonable.
First, Eagle's burden of litigating in New Hampshire must be
more than inconvenient:
. . . the concept of burden is inherently relative, and, insofar as staging a defense in a foreign jurisdiction is almost always inconvenient and/or costly, we think this factor is only meaningful where a party can demonstrate some kind of special or unusual burden.
Pritzker, 42 F.3d at 62. Eagle argues that because it consists
of only two employees who both would have to travel to New
Hampshire, incurring expense and reguiring the business to close,
it would bear a special burden if forced to defend NEA's suit
12 here. On the other hand, NEA has a recognizable interest in
obtaining convenient and effective relief, and a plaintiff's
choice of forum is accorded deference. See Sawtelle, 70 F.3d at
1395. While the forum state has an interest in obtaining
jurisdiction over a defendant who has caused injury in the state,
it has less interest if the actions occurred elsewhere. Id. In
this case, NEA arguably felt the harm of Eagle's allegedly
wrongful retention of its property here although Eagle's actions
occurred in California. As in most cases, the effective
administration of justice consideration does not tip the balance
in this case. See id. In addition, the pertinent policy
considerations add nothing to the analysis.
Eagle makes a good argument that reguiring a defense in New
Hampshire would impose a considerable burden. On balance,
however. Eagle's circumstances do not outweigh the other factors
which favor asserting personal jurisdiction. Although it is a
close decision, personal jurisdiction over Eagle in this case is
appropriate and reasonable under the constitutional standard.
B. Change of Venue
Eagle also moves for a discretionary change of venue to
California pursuant to 28 U.S.C.A. § 1404(a), acknowledging that
13 venue in New Hampshire is not improper. NEA has not addressed
the question of a change of venue in any meaningful way, even
after Eagle pointed out that deficiency in its response to NEA's
objection to the motion to dismiss. Therefore, the analysis is
entirely dependent on Eagle's presentation, NEA's having ceded
the field.
District courts enjoy considerable discretion in deciding
whether to transfer a case pursuant to section 1404 (a) . Cianbro
Corp. v. Curran-Lavoie, Inc., 814 F.2d 7, 11 (1st Cir. 1987);
Ashmore v. Northeast Petroleum Div. of Cargill, Inc., 925 F.
Supp. 36, 38 (D. Me. 1996). "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." 28 U.S.C.A. § 1404(a). There can
be no doubt that this action might have been brought in the
Southern District of California, where Eagle's principal place of
business is located and where NEA alleges its property was
wrongfully retained by Eagle. See 28 U.S.C.A § 1391(a).
In exercising its discretion to transfer venue the court
must consider both public and private interests in the location
of the litigation, including the convenience of the parties and
witnesses, the practical concerns for trial such as the
14 availability of compulsory process to compel attendance of
unwilling witnesses, and administrative problems posed by a
choice of law or congestion of court dockets. Gulf Oil Corp. v.
Gilbert, 330 U.S. 501, 508 (1947). A defendant seeking to
transfer an action bears a substantial burden to overcome the
plaintiff's choice of forum by showing that the factors in favor
of transfer predominate. Ashmore, 925 F. Supp. at 38; see also
1A James W. Moore, et al., Moore's Federal Practice 5 0.345[5]
(2d ed. 1993). Despite considering the appropriate mix of
factors, "there will often be no single right answer" as to where
venue should lie. Codex Corp. v. Milqo Elec. Corp., 553 F.2d
735, 737 (1st Cir.), cert, denied, 434 U.S. 860 (1977).
Eagle asserts that the burden it will bear to litigate in
New Hampshire is considerably greater than the burden on NEA to
litigate in California. Eagle points to its small size and
economic status, two employees, and revenue of only $100,000
annually, and argues convincingly that defending itself in a
trial in New Hampshire would have serious adverse effects on its
ability to maintain its business in California. By contrast.
Eagle claims that NEA is a large corporation with may employees
and sales of more than $10,000,000 annually, so that it could
bear the burden of litigating in southern California.
15 In addition. Eagle says that it will call witnesses on its
behalf who are not parties or employees and who are in
California, where they would not be subject to this court's
compulsory process. The property which is the subject of NEA's
suit was held in California. The plaintiff's choice of forum is
accorded less weight when the operative facts of the dispute have
less connection with the forum state. Elbalah v. Republic Ins.
C o ., 879 F. Supp. 3, 4 (D.R.I. 1995). Eagle has not addressed
the administrative interests of either forum other than to assert
that California law should provide the substantive law for the
case. A mere choice of law does not, however, tip the balance.
NEA has made no showing, and has made no effort to show,
that the convenience of the parties and witnesses or the
interests of justice would be best served by trying this suit in
New Hampshire, and the plaintiff's choice of forum cannot be used
to prejudice the defendant if it is not necessary to the
plaintiff's opportunity to pursue the action. LaVallev v. First
Nat. Bank of Boston, 625 F. Supp. 591, 594 (D.N.H. 1985). Here,
the balance of the factors favors a change of venue to the
Southern District of California, particularly in light of NEA's
failure to meaningfully address the issue.
16 CONCLUSION
For the foregoing reasons, the defendant's motion to dismiss
(document no. 5) is denied, but the motion for a transfer of
venue to the Southern District of California is granted.
SO ORDERED.
Steven J. McAuliffe United States District Judge
September 30, 1996
cc: Lawrence M. Edelman, Esg. H. Scott Haskell, Esg.