UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________________
No. 95-31037
_______________________
TELEPHONE ELECTRONICS CORP; TECNET INC;
METROLINK INC; LARRY D FERK,
Plaintiffs - Appellants,
versus
SOUTHERN PACIFIC TELECOMMUNICATIONS CO,
Defendant - Appellee.
_________________________________________________________________
Appeal from the United States District Court
for the Western District of Louisiana
(94-CV-1302)
_________________________________________________________________
September 10, 1996
Before KING, JONES, and SMITH, Circuit Judges.
EDITH H. JONES, Circuit Judge:*
Telephone Electronics Corp., Tecnet, Inc., Metrolink,
Inc., and Larry Ferk appeal the decision of the district court
dismissing their claim against Southern Pacific Telecommunications
Co. for lack of personal jurisdiction and improper venue. Appellee
contends that the corporate appellants, not registered as foreign
corporations doing business in Louisiana, were not allowed to sue
in Louisiana. Finding Appellants have made a prima facie showing
*
Pursuant to Local Rule 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opinion should not be published and is not precedent except under the limited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 Local Rule 47.5.4.
of personal jurisdiction and are not barred by the state door-
closing statute for purposes of this case, we REVERSE.
I. BACKGROUND
The parties are involved in the telecommunications
industry. Telephone Electronics Corp. (TEC), Tecnet, Metrolink,
and Ferk brought suit against Southern Pacific Telecommunications
Co. (SP Telecom) as successor to Digital Signal, Inc. (DSI).1 The
complaint alleged that shortly before DSI and SP Telecom merged,
DSI began violating an agreement it had with TEC regarding a
nationwide telephone network that was operated and maintained by
TEC and DSI. The complaint further alleged that this breach was
done intentionally and continued after the merger of DSI and SP
Telecom.
Appellants’ complaint was filed in federal district court
in Louisiana and claimed SP Telecom/DSI breached three contracts.
First, a “confidentiality agreement” entered into in February 1987
by Ferk, LDS NET, Inc., TEC, and DSI for the purpose of protecting
Ferk as he disclosed confidential information to the other parties
regarding the establishment of a telephone communications system.
Second, a subsequent “Network Agreement” entered into by TEC and
1
SP Telecom (now known as Qwest Communications Corporation) acquired
all of the outstanding shares of stock of DSI in April 1990. Thereafter, DSI was
merged into SP Telecom. Tecnet is a wholly owned subsidiary of TEC formed as a
result of the Network Agreement to assist TEC in its contractual obligations with
DSI. Metrolink is owned solely by Ferk and has an agreement with TEC by which
it receives five percent of the gross revenue due to TEC under the Network
Agreement.
2
DSI to establish a nationwide long distance telephone network. And
third, an agreement between DSI and TEC whereby TEC was to receive
part of the revenue received from Com Systems, Inc., one of the
customers of the Network Agreement.2
SP Telecom moved to dismiss for lack of personal
jurisdiction, failure to plead subject matter jurisdiction, and for
improper venue. The motion was referred to a magistrate judge who
issued a report recommending that the motion to dismiss for lack of
personal jurisdiction and improper venue be granted.3
In concluding that the court lacked personal
jurisdiction, the magistrate judge initially noted that neither TEC
or Tecnet are Louisiana residents and as such any activity of SP
Telecom directed at them cannot be considered as activity directed
at a Louisiana resident.4 The magistrate judge then found that
despite several meetings between the parties in Louisiana; repeated
contact by phone and fax with Tecnet in Louisiana; work done in
2
Com Systems and DSI entered into an agreement in April 1987 in which
DSI agreed to provide certain long distance services for Com System. According
to Appellants, DSI and TEC agreed that TEC was to receive all of the Com System
account revenue for capacity west of the Mississippi River for as long as either
DSI or TEC or their successors had an agreement with Com System.
3
In an earlier order, the district court denied SP Telecom’s motion
to dismiss for lack of subject matter jurisdiction.
4
TEC is a Mississippi corporation with its principal place of business
in Jackson, Mississippi. Tecnet is also a Mississippi corporation whose original
principal place of business was moved in late 1988 from Jackson, Mississippi to
Dallas, Texas. Metrolink is a Florida corporation whose principal place of
business is in Boca Raton, Florida. Ferk is an individual domiciled in Florida.
DSI was a Delaware corporation whose principal place of business was in
Southfield, Michigan. SP Telecom is a Delaware corporation whose principal place
of business prior to June 1994 was in San Francisco, California, and thereafter
in Denver, Colorado.
3
Louisiana by Tecnet relating to the Network Agreement; and mailing
of payments by DSI to Tecnet in Monroe, Louisiana; that the
contacts of SP Telecom/DSI with Louisiana did not constitute
sufficient purposeful activity directed at Louisiana for purposes
of finding specific personal jurisdiction. Further, the magistrate
judge found that Appellants failed to make a prima facie showing of
general personal jurisdiction and that it would be unfair for SP
Telecom to defend itself in Louisiana. The recommendation of
dismissal for improper venue was based on lack of jurisdiction over
defendants. The magistrate judge also ruled that the corporate
plaintiffs were engaged in interstate long distance business so
that they did not have to qualify under Louisiana’s door closing
statute, La. Rev. Stat. Ann. §§ 12:314A and 12:302H (West 1994), to
pursue this action.
The district court adopted the magistrate judge’s report
and dismissed Appellants’ case without prejudice. Appellants
timely appealed.
II. DISCUSSION
A. Personal Jurisdiction and Venue
When a nonresident defendant, such as SP Telecom, moves
to dismiss for lack of personal jurisdiction, the plaintiff has the
burden of establishing jurisdiction over the nonresident defendant.
Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). When the
motion to dismiss is ruled on, as here, without an evidentiary
4
hearing, the district court must accept as true uncontroverted
allegations in the plaintiff’s complaint and resolve all factual
conflicts contained in the parties affidavits in favor of the
plaintiff. Trinty Industries v. Myers & Associates, Ltd., 41 F.3d
229, 230 (5th Cir.), cert. denied, __ U.S. __, 116 S. Ct. 52
(1995); Wilson v. Belin, 20 F.3d 644, 646 (5th Cir.), cert. denied,
__ U.S. __, 115 S. Ct. 322 (1994). The plaintiff need only present
a prima facie case that personal jurisdiction is proper. Belin, 20
F.3d at 648; Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir.
1990). Review of the district court’s grant of a motion to dismiss
for lack of personal jurisdiction is de novo. Kevlin Services, Inc.
v. Lexington State Bank, 46 F.3d 13, 14 (5th Cir. 1995).
Federal courts sitting in diversity exercise personal
jurisdiction over nonresident defendants to the same extent as the
forum state court. Belin, 20 F.3d at 646. Personal jurisdiction
attaches when the nonresident defendant is “amenable to service of
process under the forum state’s long-arm statute and the exercise
of jurisdiction comports with the due process clause of the
fourteenth amendment.” ASARCO, Inc. v. Glenara, Ltd., 912 F.2d
784, 786 (5th Cir. 1990). Because the Louisiana long-arm statute
extends to the full reach of the constitution, whether SP Telecom
is subject to personal jurisdiction depends on the parameters of
federal due process. Id. at 786.
5
The exercise of personal jurisdiction over nonresident
defendants is proper if two requirements are satisfied. First, the
nonresident defendant must have purposefully established “minimum
contacts” with the forum state. ASARCO, 912 F.2d at 786. And
second, the maintenance of the suit must not offend “traditional
notions of fair play and substantial justice.” Ruston Gas Turbines,
Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418 (5th Cir.
1993)(quoting International Shoe Co. v. Washington, 326 U.S. 310,
316, 66 S. Ct. 154, 158 (1945)).
The “minimum contacts” prong of the due process analysis
may be subdivided into two different classifications of personal
jurisdiction depending on the types of contacts the nonresident
defendant has with the forum state. Belin, 20 F.3d at 647;
Bullion, 895 F.2d at 216. “Specific” personal jurisdiction arises
when the “nonresident defendant’s contacts with the forum state
arise from, or are directly related to, the cause of action.”
Belin, 20 F.3d at 647. “General” personal jurisdiction, in
contrast, permits claims to be asserted against nonresident
defendants, even claims not directly related to the nonresident
defendant’s contacts with the forum state, “if the defendant’s
contacts with the forum state are both ‘continuous and
systematic.’” Belin, 20 F.3d at 647; see Ruston Gas, 9 F.3d at 419.
SP Telecom contends the district court properly dismissed
the complaint for lack of personal jurisdiction. SP Telecom
6
asserts it did not purposefully avail itself of the privilege of
doing business in Louisiana and that any contact with Louisiana
resulted from the unilateral activity of Appellants. We disagree.
As noted, specific personal jurisdiction arises when the
nonresident defendant’s contacts with the forum state directly
relate to the cause of action. The number of contacts the
nonresident defendant has with the forum state, by itself, is not
determinative; nor may jurisdiction be based on the unilateral
activity of the plaintiff. Polythane Systems, Inc. v. Marina
Ventures Int’l Ltd., 993 F.2d 1201, 1205 (5th Cir. 1993), cert.
denied, 510 U.S. 1116, 114 S. Ct. 1064 (1994); D.J. Investments,
Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542,
547 (5th Cir. 1985); Hydrokinetics, Inc. v. Alaska Mechanical,
Inc., 700 F.2d 1026, 1028 (5th Cir. 1983), cert. denied, 467 U.S.
1257, 104 S. Ct. 3549 (1984). However, even a single act by a
nonresident defendant 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,” may
be sufficient to establish specific personal jurisdiction. Ruston,
9 F.3d at 419 (quoting Burger King Corp. v. Rudzewicz, 471 U.S.
462, 475, 105 S. Ct. 2174, 2183 (1985)). In determining whether
the nonresident defendant has made purposeful contact with the
forum state, we consider the “quality, nature, and extent of the
activity in the forum [and] the foreseeability of consequences
7
within the forum from activities outside it.” Hydrokinetics, 700
F.2d at 1028 (quoting Prejean v. Sonatrach, Inc., 652 F.2d 1260,
1268 (5th Cir. 1981)).
In this case, Appellants have made a prima facie showing
of specific personal jurisdiction. See Bullion, 895 F.2d at 217
(finding the district court failed to recognize that only a prima
facie case of personal jurisdiction need be shown). The facts
presented by Appellants show repeated contact between the parties
in Louisiana, particularly Monroe, Louisiana where Walter Frank,
executive vice president of TEC and vice president of Tecnet,
maintained and primarily used an office during the relevant time
period. For example, the Confidentiality Agreement entered into
by Ferk, DSI, TEC, and LDS Net was signed in Monroe. Discussions
and negotiations concerning the establishment of the network were
conducted in Monroe and New Orleans by Frank and DSI officials, and
Frank signed the Network Agreement for TEC in Monroe. Once the
Network Agreement was reached, DSI and Tecnet met at least five
times over the next fourteen months in Monroe or New Orleans to
discuss various aspects of the network. Numerous telephone calls,
faxes, and letters were made between DSI in Michigan and Tecnet in
Monroe concerning the network. Further, the Tecnet office in
Monroe provided a variety of services relating to the continued
operation of the network, including becoming involved in the
8
administration of the network; and some of the points of presence
in the network were located in Louisiana.
Aggregating DSI’s contacts with Louisiana, it is clear
that these contacts cannot be characterized as “random, fortuitous,
or incidental,” but rather represent deliberate and purposeful
contact with Louisiana with foreseeable consequences within
Louisiana. Trinity, 41 F.3d at 231; see also Polythane, 993 F.2d
at 1207; Bullion, 895 F.2d at 217. Appellants have shown
sufficient minimum contacts for purposes of specific personal
jurisdiction.
Separately, we do not find it unfair or unreasonable for
SP Telecom to litigate in Louisiana.5 SP Telecom is involved in
providing telecommunication services nationwide. Substantial
contact with Louisiana over a three year period occurred as a
result of the Network Agreement. Much of the documentary evidence
and many of the potential witnesses are in Monroe, Louisiana.
Although Louisiana may be less convenient for SP Telecom than an
alternative forum, we cannot say that litigation of this claim in
Louisiana is unfair or unreasonable. See Polythane, 993 F.2d at
1206; see also Compuserve, Inc. v. Patterson, 89 F.3d 1257 6th Cir.
1996)(Internet user/provider subject to personal jurisdiction in
5
In assessing the reasonableness of the exercise of jurisdiction, we
consider the burden on the nonresident defendant, the interest of the forum
state, the plaintiff’s interest in securing relief, the judicial system’s
interest in efficient resolution of the controversy, and the shared interest of
the several states. Asahi Metal Industry Co., Ltd. v. Superior Court of
California, 480 U.S. 102, 113, 107 S. Ct. 1026, 1033 (1987).
9
Ohio even though only contacts with Ohio were electronic in
nature).
Concomitantly, because the district court’s only reason
for holding venue improper was its erroneous conclusion on personal
jurisdiction, the dismissal for improper venue must also be
reversed.
B. Door-Closing Statute
SP Telecom contends the district court erred in rejecting
its argument that Appellants’ claim is barred by Louisiana’s “door-
closing” statute. The Louisiana “door-closing” statute provides
that “[n]o foreign corporation transacting business in this state
shall be permitted to present any judicial demand before any court
of this state unless it has been authorized to transact business,
if required by, and as provided in, this Chapter.” La. Rev. Stat.
Ann. § 12:314A (West 1994). An exception to this rule exists if a
foreign corporation is “[t]ransacting any business in interstate or
foreign commerce.” Id. § 12:302H. The burden of proving the
application of the door-closing statute is on the party asserting
its application. Charles Pfizer & Co., Inc. v. Tyndall, 287 So.2d
552, 553 (La. Ct. App. 1973).
SP Telecom contends that TEC and Tecnet are foreclosed
from suing in Louisiana pursuant to Section 12:314A. SP Telecom
notes that neither TEC nor Tecnet is qualified to do business in
Louisiana and asserts that notwithstanding the interstate nature of
10
their activities, Appellants have “localized” their business
presence in Monroe, Louisiana to such an extent that they are
present there and are subject to the qualification requirements.
We disagree.
Under the Network Agreement, DSI and TEC established a
nationwide telecommunications network. The network ranged from San
Diego to Boston, with all points in-between. The activities of
Tecnet in Monroe were essential to, and inseparable from, the
interstate nature of the nationwide telecommunications network and
as such do not necessarily constitute a localization of activities
or establish a distinct intrastate focus. See Radio WHKW, Inc. v.
Yarber, 838 F.2d 1439, 1444 (5th Cir. 1988); Diversacon Industries,
Inc. v. National Bank of Commerce, 629 F.2d 1030, 1034-35 (5th Cir.
1980); Fred Hale Machinery, Inc. v. Laurel Hill Lumber Co., Inc.,
483 F.2d 58, 60 (5th Cir. 1973). But caselaw clearly dictates that
regardless whether the door-closing statute might prevent
Appellants’ access to courts in Louisiana to pursue intrastate
lawsuits, the statute may not bar suits directed at activity with
an “interstate character.” Fred Hale Machinery, Inc., 483 F.2d at
60. The lawsuit against SP Telecom has that character. See Eli
Lilly & Co. v. Sav-On Drugs, Inc., 366 U.S. 276, 282, 81 S. Ct.
1320 (1961).6
6
SP Telecom also contends this court lacks subject matter jurisdiction
because two nondiverse subsidiaries should be joined as indispensable parties and
be treated as one with TEC for jurisdictional purposes. The presence of a
11
III. CONCLUSION
For the foregoing reasons, the judgment of the district
court is REVERSED and REMANDED for proceedings consistent herewith.
subsidiary may not, however, be attributed to the parent absent “proof of control
by the parent over the internal business operations and affairs of the
subsidiary.” Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1161 (5th Cir. 1983);
see Freeman v. Northwest Acceptance Corp., 754 F.2d 553, 557-58 (5th Cir. 1985).
“The degree of control exercised by the parent must be greater than that normally
associated with common ownership and directorship.” Hargrave, 710 F.2d at 1160.
SP Telecom points to no evidence of such control except for a letter indicating
one of the subsidiaries may have a claim against SP Telecom arising from the
Network Agreement; an exchange of letterhead designs; payment of Tecnet invoices
to the payment center of one of the subsidiaries; and the assertion that the
subsidiaries were primary participants in the facts relating to the complaint.
This evidence is insufficient to establish the necessary control of a parent over
its subsidiary to attribute the presence of the subsidiary to the parent.
12