Negrón-Torres v. Verizon Communications, Inc.

United States Court of Appeals
For the First Circuit

No. 06-1147

IVIS L. NEGRÓN-TORRES, on her own behalf and
in representation of her minor child HSN,

Plaintiff, Appellant,

v.

VERIZON COMMUNICATIONS, INC.,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

[Hon. Carmen Consuelo Cerezo, U.S. District Judge]

Before

Boudin, Chief Judge,
Torruella, Circuit Judge,
and Schwarzer,* Senior District Judge.

Cherie K. Durand, with whom Paul H. Hulsey, William J. Cook,
Hulsey Litigation Group, LLC, Manuel San Juan and Law Offices of
Manuel San Juan, were on brief, for appellant.
Pedro R. Pierluisi, with whom Alexandra Rivera-Sáez and
O'Neill & Borges, were on brief, for appellee.

February 9, 2007

*
Of the Northern District of California, sitting by designation.
 TORRUELLA, Circuit Judge. On April 19, 2005, Plaintiff

Ivis L. Negrón-Torres ("Negrón") filed a diversity action against

Verizon Communications, Inc. ("Verizon Communications") in the

United States District Court for the District of Puerto Rico for

damages arising from the death of her husband, Dr. Hugo Santana-

Adorno ("Santana"). On November 30, 2005, the district court

dismissed the action for lack of personal jurisdiction, and Negrón

herein appeals. After careful consideration, we affirm.

I.

On the afternoon of June 8, 2004, Santana suffered

breathing difficulties and lost consciousness. Negrón's repeated

attempts to seek urgent assistance through the Puerto Rico

Telephone Company's ("PRTC") 9-1-1 emergency telephone number were

unavailing because that telephone number was temporarily

disconnected. Finally, after more than an hour had passed, a

relative was able to reach a local rescue unit by alternative

means. Once the rescue unit received the call, the ambulance

arrived within six minutes to take Santana to the Toa Baja Medical

Hospital, where he was pronounced dead on arrival.

Earlier on the same day, PRTC had received a call from a

commercial customer disputing a charge on his telephone bill for

calls to an unknown number. PRTC apparently inadvertently

disconnected the 9-1-1 telephone number pursuant to its

investigation of the customer's complaint. Although the Puerto

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Rico 9-1-1 call center alerted PRTC to the fact that, contrary to

normal practice and experience, the center was not receiving any

calls, PRTC did not bring the 9-1-1 system back online for another

hour-and-a-half to two hours.

In her complaint, Negrón named Verizon Communications,

but not PRTC, as the defendant, on the theory that Verizon

Communications is the majority owner of PRTC by virtue of its

controlling interest in Telecomunicaciones de Puerto Rico

("TELPRI"), the holding company of PRTC. Negrón asserted that

jurisdiction over Verizon Communications was proper because of the

defendant's contacts with Puerto Rico, which she alleged were as

follows: 1) advertising and marketing in Puerto Rico; 2) operating

in Puerto Rico as Verizon Information Services Puerto Rico, Inc.,

and maintaining a local telephone number there; 3) operating and

advertising a wireless telephone service through a Puerto Rico

affiliate known as Verizon Wireless Puerto Rico, Inc.; 4) receiving

awards in Puerto Rico recognizing its achievements in promoting

diversity within the workplace in Puerto Rico through its alter ego

and or agent, PRTC; 5) funding grants in Puerto Rico that support

a variety of educational, economic, and technological initiatives

for the benefit of its customers and international affiliates

through the Verizon International Foundation; 6) maintaining a

five-year Management and Technology License Agreement with TELPRI,

of which Verizon Communications is the 52% owner, as a result of

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which Verizon affiliates generated $34 million in fees for the

years 2003 and 2004; 7) publishing telephone directories in Puerto

Rico through its affiliates; and 8) working with PRTC to promote

computer-based literacy programs and to develop a pool of qualified

engineers and other technical professionals in Puerto Rico.

In granting defendant's Motion to Dismiss, the district

court relied in large part on Verizon Communications's submission

of the declaration under penalty of perjury of Jane A. Schapker,

its Assistant Corporate Secretary and Executive Director for

Corporate Governance ("the Schapker declaration"). The Schapker

declaration asserted that: 1) Verizon Communications is

incorporated in Delaware with its principal place of business in

New York; 2) Verizon Communications and its subsidiaries and

operating companies have separate boards of directors, keep

separate books and records, and are otherwise separate; 3) Verizon

Communications is a holding company that holds stock in a number of

companies, but conducts no other business of any kind; 4) Verizon

Communications provides no telecommunications services, it does not

market or advertise, and it does not contract with consumers for

telecommunications services; 5) many of the companies whose stock

Verizon Communications holds use the word "Verizon" in their names,

but Verizon Communications does not own the trademark; 6) Verizon

Communications conducts no business in Puerto Rico, is not

registered or qualified to do business in Puerto Rico, has no

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registered agent for service in Puerto Rico, has no office or

employees in Puerto Rico, and does not maintain a Puerto Rico

telephone number; 7) Verizon Communications owns 52% of TELPRI,

which in turn wholly owns PRTC; and 8) PRTC is incorporated in

Puerto Rico, and it maintains an independent corporate existence.

II.

We review de novo a "district court's decision to dismiss

for lack of personal jurisdiction when the court held no

evidentiary hearing but instead conducted only a prima facie review

of the jurisdictional facts." Harlow v. Children's Hosp., 432 F.3d

50, 57 (1st Cir. 2005) (internal quotation marks omitted). In

reviewing a dismissal of a cause of action under Rule 12(b)(2) of

the Federal Rules of Civil Procedure, "we take specific facts

affirmatively alleged by the plaintiff as true (whether or not

disputed) and construe them in the light most congenial to the

plaintiff's jurisdictional claim." Mass. Sch. of Law, Inc. v. Am.

Bar Ass'n, 142 F.3d 26, 34 (1st Cir. 1998). In addition, "[w]e

then add to the mix facts put forward by the defendants, to the

extent that they are uncontradicted." Id. However, "[w]e caution

that, despite the liberality of this approach, the law does not

require us struthiously to credit conclusory allegations or draw

farfetched inferences." Id. (internal quotation marks omitted).

We review the district court's denial of permission to

conduct jurisdictional discovery for abuse of discretion, and "[a]

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ruling will be overturned only upon a clear showing of manifest

injustice, that is, where the lower court's discovery order was

plainly wrong and resulted in substantial prejudice to the

aggrieved party." Crocker v. Hilton Int'l Barbados, Ltd., 976 F.2d

797, 801 (1st Cir. 1992) (internal quotation marks omitted).

A. Burden of Proof

Negrón contends that the district court did not apply the

proper standard of proof when it dismissed her complaint.

Specifically, Negrón argues that the district court employed a

"strong and robust" standard when it should have conducted the

relevant analysis under a "prima facie standard."

Where a district court's personal jurisdiction is

contested, "plaintiff[s] ultimately bear[] the burden of persuading

the court that jurisdiction exists." Mass. Sch. of Law, 142 F.3d

at 34. A district court deciding a motion to dismiss for want of

personal jurisdiction should apply the prima facie standard, under

which the district court considers "only whether the plaintiff has

proffered evidence that, if credited, is enough to support findings

of all facts essential to personal jurisdiction." Boit v. Gar-Tec

Prods., Inc., 967 F.2d 671, 675 (1st Cir. 1992). However, "[t]he

prima facie showing of personal jurisdiction must be based on

evidence of specific facts set forth in the record." Id. In other

words, "[t]he plaintiff must go beyond the pleadings and make

affirmative proof." Id. (internal quotation marks omitted).

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 Although the prima facie standard is the proper metric

for evaluating a defendant's motion for dismissal on the basis of

personal jurisdiction, the case before us presents a twist: In

order for the district court to determine whether it could properly

exercise jurisdiction over Verizon Communications, it needed to

determine both whether it could assert jurisdiction on the basis of

the defendant's own contacts with Puerto Rico, and whether it could

assert jurisdiction over the defendant by virtue of its indirect

ownership of PRTC. In accordance with a pronouncement of the

Supreme Court of Puerto Rico, we have held that "to establish

jurisdiction over the parent, a party must produce 'strong and

robust' evidence of control by the parent company over the

subsidiary, rendering the latter a 'mere shell.'" De Castro v.

Sanifill, Inc., 198 F.3d 282, 283-84 (1st Cir. 1999) (quoting

Escude Cruz v. Ortho Pharm. Corp., 619 F.2d 902, 905 (1st Cir.

1980)). Negrón mistakenly interpreted the district court's proper

application of the "strong and robust" standard of proof to the

veil-piercing inquiry as a statement of the proper standard of

proof required to successfully oppose a motion to dismiss.

B. Personal Jurisdiction

Where the district court considers defendant's motion to

dismiss for lack of personal jurisdiction under the prima facie

standard, "it is plaintiff's burden to demonstrate the existence of

every fact required to satisfy both the forum's long-arm statute

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and the Due Process Clause of the Constitution." United States v.

Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001).

Puerto Rico's long-arm statute allows Puerto Rico courts

to exercise jurisdiction over a non-resident defendant if the

action arises because that person: (1) "[t]ransacted business in

Puerto Rico personally or through an agent"; or (2) "participated

in tortuous acts within Puerto Rico personally or through his

agent." P.R. Laws Ann. tit. 32, App. III, R. 4.7(a)(1); see also

Rodríguez v. Fullerton Tires Corp., 937 F. Supp. 122, 124 (D.P.R.

1996). We have noted that the reach of Puerto Rico's long-arm

statute stretches "'up to the point allowed by the Constitution.'"

Benítez-Allende v. Alcan Aluminio do Brasil, S.A., 857 F.2d 26, 29

(1st Cir. 1988) (quoting Indus. Siderúrgica v. Thyssen Steel

Caribbean, Inc., 114 D.P.R. 548, 558 (1983)). Therefore we proceed

directly to the constitutional inquiry.

Due process requires the plaintiff to prove the existence

of either general or specific jurisdiction. Harlow, 432 F.3d at

57. The critical factor in the personal jurisdiction calculus --

both general and specific -- is the existence of "minimum contacts"

between the nonresident defendant and the forum. It is axiomatic

that a court asserting jurisdiction over a nonresident defendant

must find that the defendant maintains sufficient contacts with the

forum state "such that the maintenance of the suit does not offend

traditional notions of fair play and substantial justice." Int'l

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Shoe Co. v. Wash., Off. of Unemployment, 326 U.S. 310, 316 (1945)

(internal quotation marks omitted).

1. Specific Personal Jurisdiction

A court may assert specific jurisdiction over an out-of-

state defendant "where the cause of action arises directly out of,

or relates to, the defendant's forum-based contacts." United

Elec., Radio & Mach. Workers of America v. 163 Pleasant St. Corp.

(Pleasant Street I), 960 F.2d 1080, 1088-89 (1st Cir. 1992). To

determine whether plaintiff has alleged facts sufficient to support

a finding of specific personal jurisdiction, "this circuit divides

the constitutional analysis into three categories: relatedness,

purposeful availment, and reasonableness." Platten v. HG Bermuda

Exempted Ltd., 437 F.3d 118, 135 (1st Cir. 2006) (internal

quotation marks omitted). Critically, "[a]n affirmative finding on

each of the three elements of the test is required to support a

finding of specific jurisdiction." Phillips Exeter Academy v.

Howard Phillips Fund, 196 F.3d 284, 288 (1st Cir. 1999).

In the relatedness inquiry, "causation is central."

Harlow, 432 F.3d at 62. As we have explained,

[t]he relatedness requirement is not an open
door; it is closely read, and it requires a
showing of a material connection. This court
steadfastly reject[s] the exercise of personal
jurisdiction whenever the connection between
the cause of action and the defendant's
forum-state contacts seems attenuated and
indirect . . . . A broad 'but-for' argument is
generally insufficient. Because 'but for'
events can be very remote, . . . due process

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 demands something like a 'proximate cause'
nexus.

Id. at 61 (internal citations and quotation marks omitted).

Negrón argues that the requirements of the relatedness

test are met because Verizon Communications exercised its authority

over PRTC "to direct or cause the direction of management and

policies" of PRTC. Negrón specifically points to "a five-year

Management and Technology License Agreement with TELPRI and [PRTC]"

in which "Verizon provided TELPRI and [PRTC] with advice and

direction regarding the administration and operations of

telecommunication services in Puerto Rico," including "advice on

how to maintain [PRTC's] . . . 9-1-1 emergency medical assistance

telephone services and operations." Negrón concludes that her

cause of action "directly arises out of Verizon's negligence in

guiding, managing, controlling, and/or supervising the policies and

procedures [PRTC] implemented under Verizon's management and

instruction."

The Schapker declaration directly contradicts Negrón's

allegations by asserting that Verizon Communications is merely a

holding company that "does not sell, market, or provide

telecommunications services of any kind." As evidence of

defendant's involvement in the five-year agreement, Negrón

submitted to the district court a portion of the Securities and

Exchange Commission's Annual Report Form 10-K for TELPRI for the

year ending December 2004. The excerpt provides that, under the

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five-year agreement, "affiliates of Verizon provided advice and

direction related to the administration and operations" of TELPRI,

but it does not specify which affiliates were parties to the

agreement. The defendant submits that the actual parties to the

agreement are PRTC, TELPRI, and GTE International Communications,

Inc. (another Verizon subsidiary), but not Verizon Communications.

The plaintiff has provided only conclusory allegations to

demonstrate that "the defendant's in-state conduct . . . form[s] an

'important, or [at least] material, element of proof in the

plaintiff's case." Harlow, 432 F.3d at 61 (quoting Pleasant St. I,

960 F.2d at 1089). As such, because we find that Negrón has not

met the requirements of the relatedness test, we agree with the

district court's finding that it lacked specific personal

jurisdiction over Verizon Communications.

2. General Personal Jurisdiction

A court has general jurisdiction 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." Pleasant

Street I, 960 F.2d at 1088; see also Helicópteros Nacionales de

Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984). Negrón argues

that the district court should have denied Verizon Communications's

Motion to Dismiss because Verizon has purposefully engaged in

substantial, continuous, and systematic business activity

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sufficient to satisfy the constitutional requirements for the

district court to assert general personal jurisdiction.

Plaintiff's proffered evidence to support a finding of

general jurisdiction can be divided into two broad categories of

contacts between Verizon Communications and Puerto Rico: 1)

contacts attributed to Verizon Communications by virtue of the

relationship between Verizon Communications and other Verizon

affiliates like Verizon Information Services-Puerto Rico, the

Verizon International Foundation, and Verizon Wireless de Puerto

Rico, Inc.; and 2) contacts attributed to Verizon Communications by

virtue of Verizon Communications's ownership interest in -- and

control over -- PRTC.

With regard to the first category of contacts, it is

critical to note that Negrón does not differentiate between Verizon

Communications and its subsidiaries who use the name "Verizon" in

their own company names. She alleges that Verizon Communications

maintains the following contacts with Puerto Rico: 1) Verizon

operates in Puerto Rico as Verizon Information Services Puerto

Rico, Inc., and maintains a local telephone number there; 2)

Verizon operates and advertises a wireless telephone service

through a Puerto Rico affiliate known as Verizon Wireless Puerto

Rico, Inc.; and 3) Verizon International Foundation is a

philanthropic organization that has made several grants to

institutions and individuals in Puerto Rico.

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 The Schapker declaration confirms that many of the

companies in which Verizon Communications holds stock or that it

indirectly owns, use the word "Verizon" in their names, but asserts

that Verizon Communications does not own the "Verizon" trademark.

The district court noted that Negrón's opposition to defendant's

motion to dismiss did not "address the facts, as delineated in the

Schapker declaration, that there are many, individually

incorporated subsidiaries that include [the word Verizon] in their

name." Similarly, in her appeal to this court, Negrón refers to

defendant merely as "Verizon," making no effort to clarify which of

the various Verizon-affiliated entities is at issue. We have held

that the mere use of a trademark or logo does not suffice to

demonstrate the existence of the requisite minimum contacts. See,

e.g., González v. Walgreens Co., 878 F.2d 560, 561-62 (1st Cir.

1989) (holding that the mere use of the name "Walgreens" was not

enough to assert jurisdiction over the out-of-state franchisor in

a cause of action alleging the negligence of the franchisee). That

principle is especially critical to the disposition of this case

where, as the district court observed, "both plaintiffs and

defendant, as well as the Verizon affiliates who are not parties to

this action, play fast and loose with the term 'Verizon.'"

With the second category of contacts, Negrón seeks to

make a case for general jurisdiction over Verizon Wireless solely

on the basis of the defendant's indirect ownership of PRTC. In

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other words, Negrón requests that we pierce PRTC's corporate veil

to find general jurisdiction over Verizon Communications.

The principal of limited liability is one of the

hallmarks of corporate law. DeBreceni v. Graf Bros. Leasing, Inc.,

828 F.2d 877, 879 (1st Cir. 1987). We recognize that "while it is

generally true that questions of liability and jurisdiction are

independent, the factors that we must consider for purposes of

piercing the veil separating two corporations in the liability

context also inform the jurisdictional inquiry." Pleasant Street

I, 960 F.2d at 1091 (internal citation and quotation marks

omitted).

It is well-established that the standard for finding

general jurisdiction "is considerably more stringent than that

applied to specific jurisdiction questions." Noonan v. Winston

Co., 135 F.3d 85, 93 (1st Cir. 1998) (internal quotation marks

omitted). However, "[t]he bar is set even higher in a case like

this one, in which plaintiffs seek to disregard the corporate

form." Platten, 437 F.3d at 139. We have made plain that

[t]he mere fact that a subsidiary company does
business within a state does not confer
jurisdiction over its nonresident parent, even
if the parent is sole owner of the subsidiary.
There is a presumption of corporate
separateness that must be overcome by clear
evidence that the parent in fact controls the
activities of the subsidiary.

Escude Cruz v. Ortho Pharm. Corp., 619 F.2d 902, 905 (1st Cir.

1980) (internal citations omitted). As we have already explained

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in this opinion, in order to pierce the corporate veil, Puerto Rico

law requires a proffer of "strong and robust evidence . . .

showing the parent to have that degree of control over the

subsidiary as to render the latter a mere shell for the former."

Id.

In order to oppose a defendant's motion to dismiss for

lack of jurisdiction, the plaintiff must present evidence that, if

credited, would support a finding of jurisdiction. Boit, 967 F.2d

at 675. The evidence that Negrón submitted to the district court

merely supports the undisputed fact of Verizon Communications's

indirect ownership of PRTC. She has provided no evidence from

which the court could conclude that Verizon Communications exerts

control over PRTC, and as such we decline to pierce PRTC's

corporate veil in order to find general jurisdiction over Verizon

Communications.

C. Jurisdictional Discovery

Negrón argues that the district court's dismissal of her

complaint was "procedurally premature" because it took place

without any jurisdictional discovery and before other discovery

commenced. Although the district court did not explicitly address

Negrón's request for discovery in its opinion, we interpret the

court to have exercised its discretion to deny jurisdictional

discovery. Accordingly, our review is for abuse of discretion.

Crocker, 976 F.2d at 801. As we have long acknowledged, "a

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diligent plaintiff who sues an out-of-state corporation and who

makes out a colorable case for the existence of in personam

jurisdiction may well be entitled to a modicum of jurisdictional

discovery if the corporation interposes a jurisdictional defense."

United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 626 (1st Cir.

2001) (internal quotation marks omitted). However, even if the

plaintiff presents a colorable claim for personal jurisdiction, she

faces an uphill battle because "[t]he standard for reversing a

district court's decision to disallow jurisdictional discovery is

high." Id. We may reverse the district court only if we find that

"its analysis was 'plainly wrong and resulted in substantial

prejudice.'" Id. (quoting Crocker, 976 F.2d at 801). In addition

to making a colorable claim, it is also incumbent upon the

plaintiff to "present facts to the court which show why

jurisdiction would be found if discovery were permitted." Id.

In this case, because Negrón has failed to make a

colorable claim for personal jurisdiction, we have no reason to

overturn the district court's denial of her request for

jurisdictional discovery.

III.

For the foregoing reasons, the decision of the district

court is affirmed. Although the plaintiff's claim did not survive

the jurisdictional challenge in federal court, nothing in this

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opinion should be read to discourage her from pursuing her claim

against PRTC in state court.

Affirmed.

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