Southern Copper, Inc v. Specialloy, Inc

• Court: Court of Appeals for the Fifth Circuit
• Decided: December 26, 2000
• Docket: 00-50408
• Status: Unpublished

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

____________________

No. 00-50408

Summary Calendar ____________________

SOUTHERN COPPER, INC

Plaintiff - Appellant

v.

SPECIALLOY, INC

Defendant - Appellee

_________________________________________________________________

Appeal from the United States District Court for the Western District of Texas No. W-00-CV-49 _________________________________________________________________ December 22, 2000 Before KING, Chief Judge, and WIENER and DENNIS, Circuit Judges.

PER CURIAM:*

Plaintiff-Appellant Southern Copper, Inc. appeals from the

district court’s judgment granting Defendant-Appellee Specialloy,

Inc.’s Motion to Dismiss for Lack of Personal Jurisdiction. For

the following reasons, we AFFIRM.

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. I. FACTUAL AND PROCEDURAL HISTORY

Southern Copper, Inc. (“Southern Copper”) is a Texas-based

corporation that manufactures copper tubing. On August 10, 1998,

representatives of Southern Copper contacted the President of

Specialloy, Inc. (“Specialloy”), an Illinois-based company,

seeking to purchase copper-nickel billets for the manufacture of

its tubing. On August 17, two of Southern Copper’s

representatives — the Chief Executive Officer and the Sales

Manager — traveled to Specialloy’s plant in Chicago, Illinois to

observe the plant and to discuss the products.

Three orders of copper-nickel billets arose from these

contacts. First, in August 1998, Southern Copper ordered a

sample shipment of the billets from Specialloy. Finding this

sample shipment to be satisfactory, Southern Copper placed two

additional orders of billets on October 8 and December 8, 1998.

In placing these orders, Southern Copper initiated contact,

telephoning or faxing its order to Specialloy. The only other

contact between the parties was the exchange of telephone calls

prior to the October and December orders.

Once Southern Copper placed its orders, Specialloy would

cast the billets in its Chicago plant. Then, Specialloy would

make the billets available to Southern Copper, F.O.B.

Specialloy’s Chicago Plant. Southern Copper paid for the

shipping and directed the independent freight carrier to

2 transport the billets from Chicago, Illinois to its headquarters

in Texas.

On January 14, 2000, Southern Copper sued Specialloy in

Texas state court, claiming that the billets contained in the

second and third shipments were defective. Specialloy removed

the suit on February 28, 2000, based upon diversity and filed a

Motion to Dismiss for Lack of Personal Jurisdiction on March 6.

On March 29, 2000, the district court granted Specialloy’s

motion.

Southern Copper timely appealed.

II. SOUTHERN COPPER DID NOT ESTABLISH A PRIMA FACIE CASE

OF PERSONAL JURISDICTION OVER SPECIALLOY

On appeal, Southern Copper contends that the district court

erred in dismissing the suit against Specialloy for lack of

personal jurisdiction,1 claiming that Specialloy invoked the

1 Southern Copper also argues that the district court abused its discretion in denying Southern Copper’s motion for an extension of time to discover “potential jurisdictional facts.” We disagree. Southern Copper’s motion for an extension merely requested additional time to “take the deposition of Defendant’s representative to determine additional facts to support those set forth in this Response.” Most notably, the motion requested the extension only if the district court “fe[lt] that additional facts would be helpful in determining jurisdiction,” and only if the court “fe[lt] it [was] necessary.” The district court was well within its discretion in deciding that “sufficient facts ha[d] been presented for the Court to rule on Defendant’s motion.” See Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 220-21 (5th Cir. 2000) (“We have previously noted that a district court has ‘broad discretion in all discovery matters,’ Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir. 1982), and that ‘such discretion will not be disturbed

3 jurisdiction of Texas courts by placing its goods into the stream

of commerce, and hence into Texas. Specialloy responds that

because it did not act to avail itself of the benefits and

protections of Texas, a Texas court “simply cannot exercise

personal jurisdiction over Specialloy within the bounds of Due

Process.”

We review de novo a dismissal for lack of personal

jurisdiction. See Alpine View Co. v. Atlas Copco AB, 205 F.3d

208, 214 (5th Cir. 2000); Jobe v. ATR Mktg., Inc., 87 F.3d 751,

753 (5th Cir. 1996). “When a court rules on a motion to dismiss

for lack of personal jurisdiction without holding an evidentiary

hearing, it must accept as true the uncontroverted allegations in

the complaint and resolve in favor of the plaintiff any factual

conflicts[.]” Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir.

1999); see also Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir.

1990). Therefore, the plaintiff need only present a prima facie

case of personal jurisdiction to satisfy its burden. See Alpine

View Co., 205 F.3d at 215.

Under the Federal Rules of Civil Procedure, a federal court

sitting in diversity may exercise jurisdiction over a nonresident

ordinarily unless there are unusual circumstances showing a clear abuse.’”). Southern Copper requested time to adduce additional facts to support those it had already presented to the district court, without indicating the possible relevance of these additional facts. The district court, as invited by Southern Copper’s motion, denied Southern Copper’s request for additional time for discovery of those additional facts. We decline to find an abuse of discretion on the part of the district court.

4 corporate defendant only if permitted by state law. See FED. R.

CIV. P. 4(e)(1), 4(h)(1), 4(k)(1); see also Alpine View Co., 205

F.3d at 214. We conduct a two-prong analysis to determine

whether personal jurisdiction is proper over a nonresident.

See Latshaw, 167 F.3d at 211; Jobe, 87 F.3d at 753. First, we

determine whether the long-arm statute of the forum state confers

personal jurisdiction over the defendant. See Latshaw, 167 F.3d

at 211. Second, we ask whether the “exercise of such

jurisdiction by the forum state is consistent with due process

under the United States Constitution.” Id. However, because the

Texas long-arm statute, see TEX. CIV. PRAC. & REM. CODE ANN. § 17.042

(Vernon 1997), confers personal jurisdiction over a nonresident

defendant to the full extent allowed by the federal Constitution,

our two-prong framework collapses into a single inquiry of

whether the exercise of personal jurisdiction over the

nonresident defendant is consistent with the Due Process Clause

of the Fourteenth Amendment. See Alpine View Co., 205 F.3d at

214.

Due process permits the exercise of personal jurisdiction

when two conditions are satisfied. First, the nonresident

defendant must have “purposefully availed [itself] of the

benefits and protections of the forum state by establishing

‘minimum contacts’ with the forum state.” Id. (internal

quotations omitted) (quoting Mink v. AAAA Dev. LLC, 190 F.3d 333,

336 (5th Cir. 1999)); see also Int’l Shoe Co. v. Washington, 326

5 U.S. 310, 316 (1945); Latshaw, 167 F.3d at 211. Second, “the

exercise of jurisdiction over that defendant [must] not offend

‘traditional notions of fair play and substantial justice.’”

Alpine View Co., 205 F.3d at 215 (quoting Mink, 190 F.3d at 336);

see also Int’l Shoe Co., 326 U.S. at 316.

The “minimum contacts” inquiry may be satisfied by contacts

sufficient for general jurisdiction or specific jurisdiction.

See Alpine View Co., 205 F.3d at 215. Because Southern Copper is

not alleging general jurisdiction over Specialloy, however, our

examination concentrates on specific jurisdiction.

The district court concluded that Specialloy’s contacts with

Texas did not justify the exercise of specific personal

jurisdiction. Mindful of Southern Copper’s low evidentiary

burden, and after taking as true its uncontroverted allegations

and resolving any factual conflicts in favor of Southern Copper,

we agree with the district court that Southern Copper failed to

adduce evidence sufficient for a prima facie case of personal

jurisdiction over Specialloy.

Regarding the first due process condition of minimum

contacts, when a suit relates to the defendant’s contact with the

forum, specific jurisdiction is proper if that contact “resulted

from the defendant’s purposeful conduct and not the unilateral

activity of the plaintiff.” Bearry v. Beech Aircraft Corp., 818

F.2d 370, 374 (5th Cir. 1987); see also Hanson v. Denckla, 357

U.S. 235, 253 (1958) (“The unilateral activity of those who claim

6 some relationship with a nonresident defendant cannot satisfy the

requirement of contact with the forum State.”). This restriction

on the minimum contacts inquiry ensures that the defendant

“purposefully availed” itself of the benefits of the forum state

such that it could “reasonably anticipate being haled into court

there.” Alpine View Co., 205 F.3d at 215 (internal quotations

omitted) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462,

474 (1985)); see also Bearry, 818 F.2d at 375.

We find that any connection that Specialloy has with the

State of Texas stems from the unilateral activity of Southern

Copper. Specialloy does not maintain an office, agent, or place

of business in Texas. Moreover, as the district court

recognized, Specialloy did not reach out to Southern Copper in

Texas in order to sell its billets; instead, Southern Copper

initiated contact with Specialloy and traveled to Specialloy’s

plant in Illinois to inspect its products. All orders were

placed by Southern Copper by telephone or facsimile, and Southern

Copper hired an independent carrier to pick up the billets in

Illinois, directing shipment to Texas.

The primary facts that Southern Copper offers to support the

exercise of personal jurisdiction over Specialloy are (1) the

telephone calls between the parties and (2) Specialloy’s Internet

website, which is available to residents of Texas. We recognize

that the telephone calls were initiated by both parties at the

time of the October and December orders and that these calls were

7 “necessary to discuss the quality of the sample shipment and to

verify the details of the two larger purchase orders.” However,

we have held that “an exchange of communications between a

resident and a nonresident in developing a contract is

insufficient of itself to be characterized as purposeful activity

invoking the benefits and protection of the forum state’s laws.”

Stuart v. Spademan, 772 F.2d 1185, 1193 (5th Cir. 1985). Because

it was Southern Copper that initiated the contact and the

subsequent orders, these telephone calls are not sufficient

additional evidence to support an exercise of jurisdiction over

Specialloy.

Nor does Specialloy’s Internet website strengthen Southern

Copper’s case for personal jurisdiction. “Courts addressing the

issue of whether personal jurisdiction can be constitutionally

exercised over a defendant look to the ‘nature and quality of

commercial activity that an entity conducts over the Internet.’”

Mink v. AAAA Dev. LLC, 190 F.3d 333, 336 (5th Cir. 1999) (quoting

Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124

(W.D. Pa. 1997)). In Mink v. AAAA Development LLC, this court

recognized that a company may actively do business over its

Internet website by entering into contracts with residents of

other states. See 190 F.3d at 336. In such cases, personal

jurisdiction over that nonresident company may be appropriate.

See id. On the other hand, we also noted that “[a]t the other

end of the spectrum, there are situations where a defendant

8 merely establishes a passive website that does nothing more than

advertise on the Internet.” Id. In those cases, personal

jurisdiction is not proper. See id.

This is a case of the latter type of website. There is no

evidence in the record which demonstrates that Specialloy entered

into contracts with customers over its website, and in contrast

to the website in Mink, Specialloy’s website did not provide an

order form for purchases. See id. The website described the

company and its products in general terms and was used merely for

advertisement, providing details by which a reader could contact

the company for more information. As this court has recognized,

“advertising in national publications is not in itself sufficient

to subject a defendant to personal jurisdiction.” See

Singletary v. B.R.X., Inc., 828 F.2d 1135, 1136 (5th Cir. 1987).

Moreover, as the district court noted, Southern Copper did not

demonstrate that the suit “arose out of or was related to”

Specialloy’s website. See id. Accordingly, we find the website

was not sufficient additional contact to support personal

In the face of this lack of activity within Texas on the

part of Specialloy, Southern Copper asserts that its conduct was

not unilateral because it was Specialloy that placed its products

into the stream of commerce with knowledge that the billets were

destined for Texas. As this court has recognized:

9 [W]hen a nonresident’s contact with the forum state “stems from a product, sold or manufactured by the foreign defendant, which has caused harm in the forum state, the court has [specific] jurisdiction if it finds that the defendant delivered the product into the stream of commerce with the expectation that it would be purchased by or used by consumers in the foreign state.”

Alpine View Co., 205 F.3d at 216 (alteration in original)

(quoting Bearry, 818 F.2d at 374). However, as we noted above,

Specialloy shipped the billets F.O.B. Specialloy’s Chicago Plant,

with Southern Copper taking possession at that location. While

we recognize this fact, in itself, cannot preclude a finding of

personal jurisdiction over Specialloy, it certainly is a relevant

factor for us to consider. See Singletary, 828 F.2d at 1136

(recognizing in a general jurisdiction analysis that minimum

contacts was “weakened even further by the fact that the sale was

initiated by the buyer and was shipped F.O.B. California, the

seller’s place of business”); Charia v. Cigarette Racing Team,

Inc., 583 F.2d 184, 188-89 (5th Cir. 1978).

“The suggested significance of the FOB shipment is that,

under a ‘stream of commerce’ rationale, [Specialloy] was

indirectly shipping its product into [Texas] and could reasonably

have foreseen that the sale would have effects in [Texas].”

Charia, 583 F.2d at 188. However, we find that Specialloy did

not purposefully avail itself of the benefits of the state by

placing the billets into the stream of commerce because Southern

Copper took possession of the billets in Illinois. Moreover,

10 Specialloy has no presence in Texas, and no Specialloy employee

has ever set foot in Texas. Therefore, Southern Copper’s already

fragile case is weakened further by the F.O.B. designation.2

In summary, after our review of the record, taking as true

Southern Copper’s uncontroverted allegations and resolving any

factual conflicts in favor of Southern Copper, we conclude that

Southern Copper failed to adduce evidence to meet its prima facie

burden to support the exercise of personal jurisdiction over

Specialloy. Because we find that the first due process condition

of minimum contacts was not satisfied, we need not address

whether the exercise of personal jurisdiction in this case would

offend traditional notions of fair play and substantial justice.

2 We recognize that in Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415 (5th Cir. 1993), this court came to a different conclusion regarding the F.O.B. designation. In that case, this court held that the seller “intentionally placed its products into the stream of commerce by delivering them to a shipper destined for delivery in Texas.” Id. at 420. However, that case is distinguishable on its facts because the seller had “211 contacts” with the state of Texas through its business dealings with the plaintiff and also had its own employees situated in Texas to serve the plaintiff’s customers. See id. Those additional facts are not present in this case. Here, there are three shipments initiated by Southern Copper, and Specialloy has no other presence within the state. Although a single contact with the forum state is sufficient to support personal jurisdiction over a nonresident defendant, the quality of the contacts in this case do not rise to the level of purposeful availment. See Bearry, 818 F.2d at 374 (“If the contact resulted from the defendant’s conduct and created a substantial connection with the forum state, even a single act can support jurisdiction.” (emphasis added)). Indeed, it appears that Specialloy permissibly structured its dealings with Southern Copper to avoid being haled into court in Texas. See Stuart v. Spademan, 772 F.2d 1185, 1190 (5th Cir. 1985) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).

11 See Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113-

16 (1987); Felch v. Transportes Lar-Mex SA DE CV, 92 F.3d 320,

329 n.20 (5th Cir. 1996).

III. CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the

district court.