DIGI-TEL HOLDINGS, INC. v. PROTEQ TELECOMM., 89 F.3d 519 (8th Cir. 1996)

Digi-Tel Holdings, Inc., Appellant, v. Proteq Telecommunications (PTE), Ltd., Appellee. Brustuen International, Inc., Intervenor.

No. 95-2853United States Court of Appeals, Eighth Circuit.Submitted March 13, 1996
Filed July 11, 1996

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Counsel who presented argument on behalf of the appellant was David R. Marshall of Minneapolis, MN. Terri a. Georgen of Minneapolis appeared on the brief.

Counsel who presented argument on behalf of the appellee was Duane W. Krohnke of Minneapolis, MN. Gregory Schaefer, Sidney Spaeth, and Robert Magill, all of Minneapolis, appeared on the brief.

Appeal from the United States District Court for the District of Minnesota.

Before FAGG, BRIGHT, and WOLLMAN, Circuit Judges.

BRIGHT, Circuit Judge.

[1] Digi-Tel Holdings, Inc. (Digi-Tel) appeals the order of the district court[1] dismissing its breach of contract and fraud claims against Proteq Telecommunications (PTE), Ltd. (Proteq) for lack of personal jurisdiction. The district court held that the exercise of personal jurisdiction over Proteq, a Singapore company, was not consistent with due process because Proteq did not have sufficient “minimum contacts” with the State of Minnesota. We affirm.

[2] I. BACKGROUND
[3] Proteq, a Singapore company, is a wholly-owned subsidiary of Proteq Technologies PTE, Ltd., a Singapore company, which in turn is a wholly-owned subsidiary of Goldtron, Ltd., also a Singapore company. Since its incorporation on July 16, 1992, Proteq’s business has been the research and development of telecommunication products. Proteq does not maintain any offices, have any employees, or own any property in Minnesota.

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There is no evidence that Proteq has ever solicited business or advertised in Minnesota. Proteq is not licensed to do business in Minnesota and has no personnel or agents authorized to accept process within Minnesota.

[4] Major Computer Incorporated (Major), a Minnesota corporation, enlisted the assistance of Brustuen International, Inc., a Minnesota-based international trade consulting firm, in an effort to locate a manufacturing source of cellular telephones. As a result of these efforts, in the summer of 1992, Major entered into an agreement to purchase up to 240,000 cellular phones from Proteq. There were seven face-to-face meetings between Proteq and Major regarding developing and selling the cellular phones, all of which took place in Singapore. On one of these occasions, Major’s Vice President obtained a sample cellular phone, and Proteq sent four additional samples to Major in Minnesota. The parties exchanged dozens of letters and faxes and numerous phone calls in connection with the sales agreement.

[5] The Proteq/Major agreement provided that the agreement would be construed and governed by Minnesota law. Under the terms of the contract, Major would assume control of the phones while they were still in Singapore. The sales agreement provided the price as “F.O.B. Singapore.” Delivery of the phones was expected to begin sometime late in 1992. The duration of the contract was the later of two years or 240,000 units. In addition, Major had the option to renew under certain conditions.

[6] Proteq encouraged Major to re-sell the phones to Major’s customers before they were manufactured. Less than one month after signing its agreement with Proteq, Major contracted to sell these same cellular phones to Digi-Tel.

[7] In December of 1992, Goldtron (the parent company of Proteq) applied to the Minnesota Secretary of State for registration of the trademark “Goldtron.” Goldtron obtained a “Certificate of Registration of Mark.”[2] The application extended to a range of products including cellular phones and audio and security equipment. Proteq mailed a copy of the trademark certificate to Major shortly after the certificate was obtained. The sample phone which Proteq had sent to Major in July of 1992 bore the mark “Goldtron”, and Proteq admits that it considered using “Goldtron” as the trademark on the phone.

[8] Proteq never delivered cellular phones to Major, and Major was unable to fulfill its agreement with Digi-Tel. Digi-Tel filed suit against Major for breach of the Major/Digi-Tel agreement. Major subsequently experienced financial difficulties which resulted in Major’s secured creditor foreclosing on its assets.

[9] In December of 1993, an employee of Goldtron and an employee of a Hong Kong subsidiary of Goldtron traveled to Minnesota to meet with representatives of Digi-Tel. At the meeting they discussed the possibility of enlisting Digi-Tel to help in obtaining FCC approval of a cellular phone and for marketing and distributing the phone. The phone was a different model than that envisioned under the Proteq/Major agreement. They delivered samples of the phone to the Digi-Tel representatives. They also offered Digi-Tel $100,000 to resolve Digi-Tel’s claims against Proteq.[3] Digi-Tel declined the offer.

[10] Digi-Tel subsequently filed suit against Proteq for fraud and breach of contract. Digi-Tel acquired Major’s interest in the Proteq/Major agreement from Major’s secured creditor. Digi-Tel commenced the action against Proteq as a third-party beneficiary of the Major/Proteq agreement and as the assignee of Major’s rights under that agreement. Digi-Tel served Proteq under Minnesota long-arm statute 303.13. Following a hearing on June 30, 1995, at which no

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live testimony was presented, the district court granted Proteq’s motion to dismiss for lack of personal jurisdiction. The district court determined that the exercise of personal jurisdiction over Proteq would violate due process because Proteq lacked sufficient minimum contacts with the State of Minnesota. Digi-Tel appealed.

[11] II. DISCUSSION
[12] To survive a motion to dismiss for lack of personal jurisdiction, the plaintiff need only make a prima facie showing of personal jurisdiction over the defendant. Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir. 1995); Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818
(8th Cir. 1994); Watlow Elec. Mfg. Co. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir. 1988). For the purposes of a prima facie showing, the court must view the evidence in the light most favorable to the plaintiff and resolve all factual conflicts in the plaintiff’s favor. Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir. 1991). We review de novo whether the plaintiff has presented a prima facie case of personal jurisdiction. Bell Paper Box, Inc. v. Trans Western Polymers, Inc., 53 F.3d 920, 921 (8th Cir. 1995); Northrup King, 51 F.3d at 1387.

[13] In deciding whether a court has personal jurisdiction over a nonresident defendant, this court is guided by two primary rules. First, the facts presented must satisfy the requirements of the forum state’s long-arm statute. Second, the exercise of personal jurisdiction over the defendant must not violate due process. Northrup King, 51 F.3d at 1387. Because the district court concluded that due process would be violated if personal jurisdiction were conferred over Proteq, it did not reach the issue of whether or not the requirements of the Minnesota long-arm statute were met.

[14] Due process mandates that jurisdiction be exercised only if defendant has sufficient “minimum contacts” with the forum state, such that summoning the defendant to the forum state would not offend “`traditional notions of fair play and substantial justice.'” International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). To maintain personal jurisdiction, defendant’s contacts with the forum state must be more than “random,” “fortuitous,” or “attenuated.” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). Sufficient contacts exist when “the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). In assessing the defendant’s reasonable anticipation, there must be “`some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'” Burger King, 471 U.S. at 475
(quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Jurisdiction is proper where the contacts proximately result from actions by the defendant itself that create a “substantial connection” with the forum State. Id.

[15] In conjunction with these basic principles of due process, this court applies a five-factor test in analyzing the constitutional requirements needed for personal jurisdiction: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum; (3) the relation of the cause of action to these contacts[4] ; (4) the

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interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties. Wessels, Arnold Henderson v. Nat’l Medical Waste, Inc., 65 F.3d 1427, 1432 (8th Cir. 1995); Trans Western Polymers, 53 F.3d at 922; Aaron Ferer Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir. 1977). The first three factors are of primary importance, and the last two are “secondary factors.” Minnesota Min. and Mfg. Co. v. Nippon Carbide Indus. Co., 63 F.3d 694, 697 (8th Cir. 1995), cert. denied, 116 S.Ct. 1288 (1996); Northrup King, 51 F.3d at 1388. Because the first three factors are closely interrelated, we consider them together.

[16] Digi-Tel has established the existence of certain contacts between Proteq and the forum. First, Proteq sent numerous letters and faxes and made several telephone calls to Minnesota in connection with the Proteq/Major contract. Second, the contract contains a Minnesota choice-of-law provision. Although letters and faxes may be used to support the exercise of personal jurisdiction, they do not themselves establish jurisdiction. Wessels, Arnold Henderson, 65 F.3d at 1433; Northrup King, 51 F.3d at 1388; Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 656 (8th Cir. 1982). Similarly, although a choice-of-law provision may be considered for jurisdictional purposes as it may “reinforc[e] (defendant’s) deliberate affiliation with the forum State and the reasonable foreseeability of possible litigation there[,]” Burger King, 471 U.S. at 482, it is insufficient in itself to confer jurisdiction. Id.; Wessels, Arnold Henderson, 65 F.3d at 1434. We agree with the district court that, in the circumstances of this case, these contacts do not create a “substantial connection” to Minnesota sufficient to subject Proteq to personal jurisdiction in the state.[5]

[17] Digi-Tel cites Proteq’s shipment of four sample cellular phones to Major in Minnesota as another contact with the forum state. While this shipment of samples has relevance, its effect is minimal. We observe that on another occasion, Major’s Vice President picked up a sample phone while in Singapore. The shipment of the samples into the forum represents a “casual” or “fortuitous” contact rather than a significant contact with the forum. See International Shoe, 326 U.S. at 320; Burger King, 471 U.S. at 475.

[18] Digi-Tel also argues that the district court erred by refusing to impute Goldtron’s contacts with Minnesota to Proteq.[6] In determining

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whether “minimum contacts” exist, contacts with the forum state that are made on behalf of the defendant by others may be considered. The Supreme Court has indicated that “when commercial activities are `carried on in behalf of’ an out-of-state party those activities may sometimes be ascribed to the party, at least where [it] is a `primary participan[t]’ in the enterprise and has acted purposefully in directing those activities.” Burger King, 471 U.S. at 479 n. 22 (citations omitted). In U.S. Kids, Inc., 22 F.3d 816, this court considered a visit by an independent businessman on behalf of the defendant to plaintiff’s place of business as a contact between defendant and the forum. The court noted that the businessman lacked any independent relationship with the plaintiff and had no reason to visit plaintiff’s business other than as defendant’s agent. Id. at 819 n. 1.

[19] In December of 1992, Goldtron (Proteq’s parent company) applied for a Minnesota copyright, and in December of 1993 two Goldtron representatives visited Digi-Tel in Minnesota. Although Digi-Tel argues that these contacts should be imputed to Proteq, it fails to produce evidence sufficient to support the inference that Goldtron’s activities were directed by or primarily for the benefit of Proteq. First, there is insufficient factual support in the record to create an inference that the December 1992 Minnesota trademark application was filed at the direction of or primarily for the benefit of Proteq. In May of 1992, “Goldtron” was the new name of the Singapore corporation, Gold Coin Limited. Later that year, Goldtron began a worldwide effort to register its new trademark. Furthermore, the Minnesota trademark covered a range of products including not only cellular phones, but also mobile fax machines, digital compact cassette players and security equipment.[7]

[20] In December of 1993, two representatives of Goldtron travelled to Minneapolis, Minnesota to meet with representatives of Digi-Tel. One of Goldtron’s representatives later drafted an internal memorandum which listed three purposes for the visit:

1) To hand carry our cellular phone for FCC Approval

2) To re-establish our relationship with DIGI-TEL as a marketing and distribution agent for the said cellular phone
3) To obtain information on DIGI-TEL’s legal action against Major Computers Inc.

[21] (A-251). Digi-Tel also claims that at the meeting, the Goldtron representatives offered Digi-Tel $100,000 to resolve Digi-Tel’s legal claims. Digi-Tel rejected the offer.

[22] Digi-Tel, however, again fails to produce evidence sufficient to support the inference that the meeting in Minnesota was not for Goldtron’s own business purposes but was directed by or primarily for the benefit of Proteq. First, the sample phone provided to Digi-Tel at the Minnesota meeting had a different design than the cellular phone being developed by Proteq. The phone was developed under a joint venture between another Goldtron subsidiary and a Taiwanese business. Furthermore, after the meetings, Digi-Tel and Goldtron executed a document which specified, “Goldtron, Ltd. represents and acknowledges that it is not supplying the above described cellular telephones pursuant to its contract with Major . . . and the contract between Major and Digi-Tel.” (A-2245).

[23] Secondly, as to the discussion of a possible settlement, courts have hesitated to use unsuccessful settlement discussions as “contacts” for jurisdictional purposes. See Minnesota Min. and Mfg. Co., 63 F.3d at

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698; Conwed Corp. v. Nortene, S.A., 404 F. Supp. 497, 504-505
(D. Minn. 1975). Giving jurisdictional significance to such activities may work against public policy by hindering the settlement of claims. Regardless, even including any negotiations concerning the contractual dispute between Digi-Tel and Major, which indirectly involved Proteq, Digi-Tel has failed to provide evidence to support the inference that the meeting was conducted primarily for the benefit or at the direction of Proteq.

[24] The series of events culminating in this suit began with Major seeking out a manufacturing source for cellular phones. All seven of the face-to-face meetings regarding Proteq’s sale of cellular phones to Major took place in Singapore. No part of the contract was to be performed in Minnesota. See Wessels, Arnold Henderson, 65 F.3d at 1433. Proteq was to develop and produce the phones overseas and transfer ownership to Major in Singapore. The delivery term was “F.O.B. Singapore” which means that the seller was obligated to deliver to Singapore and nowhere else. See, U.S. Kids, Inc., 22 F.3d at 819. We pause to emphasize that no shipment of actual product came into Minnesota. The only domestic element of the agreement related to the interpretation of the contract under Minnesota law.

[25] Thus the negotiations, meetings, production, and delivery were all centered in Singapore. The contacts with Minnesota appear at best as inconsequential rather than substantial under these circumstances. Proteq did not create a substantial connection between itself and Minnesota, it merely engaged in negotiations with a purchaser who happened to reside in Minnesota. Given the nature and quality of Proteq’s contacts with Minnesota, traditional notions of fair play and substantial justice indicate that the corporation in Singapore would not expect to litigate in the State of Minnesota.

[26] Our consideration of the “secondary factors” does not change this conclusion. First, we note that Minnesota has an obvious interest in providing a local forum in which its residents may litigate claims against non-residents. However, Minnesota’s interest in providing its residents with a forum cannot make up for the absence of minimum contacts. See Falkirk Min. Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 376 (8th Cir. 1990). The convenience of the parties favors neither side. Witnesses are in both Minnesota and Singapore. Finally, as the United States Supreme Court stated in Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 115 (1987), “`Great care and reserve should be exercised when extending our notions of personal jurisdiction into the international field.'” (quoting United States v. First Nat’l City Bank, 379 U.S. 378, 404 (1965) (Harlan, J. dissenting)). See also Falkirk Min. Co., 906 F.2d at 376 (“The careful inquiry we are required to make before exercising jurisdiction over foreign defendants supports our conclusion that no personal jurisdiction exists here, especially given the absence of minimum contacts between appellees and the [forum].”).

[27] III. CONCLUSION
[28] Accordingly, we affirm the order of the district court dismissing the complaint for lack of personal jurisdiction.