United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT July 9, 2004
_______________________
Charles R. Fulbruge III
No. 03-30622 Clerk
_______________________
BROKERWOOD PRODUCTS INTERNATIONAL (U.S.), INC.,
Plaintiff-Appellant/Cross-Appellee
v.
CUISINE CROTONE, INC.,
Defendant - Appellee,
EXPORT DEVELOPMENT CANADA,
Defendant-Appellee/Cross-Appellant
--------------------
Appeals from the United States District Court
for the Eastern District of Louisiana
(02-CV-1152)
--------------------
Before JONES, WIENER and PRADO, Circuit Judges.
EDWARD C. PRADO, Circuit Judge:*
Brokerwood Products International (U.S.), Inc. (“Brokerwood
U.S.”) appeals from a forum non conveniens dismissal of its
lawsuit against two Canadian companies, Cuisine Crotone, Inc.
(“Cuisine”)and Export Development Canada (“EDC”). Because the
district court did not abuse its discretion in dismissing the
claims against Cuisine, we affirm its forum non conveniens ruling
to that extent. We reverse, however, the district court’s ruling
*
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this opinion should not be published and is not precedent except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.
1
that EDC had waived its objections to personal jurisdiction, and
we conclude that the district court should have dismissed the
claims against EDC for lack of personal jurisdiction.
Background
Brokerwood U.S. is a Louisiana corporation affiliated with a
Canadian corporation, Brokerwood Products International (Canada),
Inc. (“Brokerwood Canada”). Both Brokerwood companies act as
agents in selling Canadian-manufactured cabinet products.
Brokerwood U.S. imports Canadian cabinets and sells them in the
United States. Both Brokerwood corporations (and the other
related entities) are owned by William and Janet Shiell, who are
also Brokerwood U.S.’s sole employees. The Shiells own a total
of six related companies, located both in the United States and
Canada. The Shiells claim dual United States-Canadian
citizenship, and both divide their time between Canada and the
United States. While Brokerwood U.S. has an office in Louisiana,
Brokerwood Canada is based in Montreal. A written letter from
all six related Shiell companies, including Brokerwood U.S.,
indicates that the international head office for all the
companies is in Montreal and that at least one of the officers
can always be reached there.
As part of its business, Brokerwood Canada entered into an
agency agreement with a company called Boiseries Crotone, Inc.
Appellee Cuisine later assumed Boiseries Crotone’s obligations
2
under this agreement. Cuisine is a Canadian corporation; all of
its employees work and live in Canada.
Under the agency agreement, Brokerwood Canada was to act as
an exclusive agent for United States cabinetry sales. The
contract anticipated that Brokerwood Canada would use sub-agents,
including Brokerwood U.S. The relationship between the
Brokerwood entities and Cuisine eventually turned sour, with each
side alleging that the other failed to comply with their
agreement.
Appellee-Cross-Appellant EDC is a Canadian Crown corporation
solely owned by the Canadian government. As part of an effort to
promote Canadian exports, EDC provides credit risk insurance to
Canadian manufacturers that export goods. In November 2000,
however, EDC stopped insuring invoices to Brokerwood U.S.,
essentially preventing Brokerwood U.S. from obtaining Canadian
cabinets on credit. Brokerwood U.S. alleges that Cuisine caused
EDC’s actions by providing EDC with false information about
Brokerwood U.S.’s payment history.
Brokerwood U.S. originally sued Cuisine and EDC in Louisiana
state court. Cuisine timely removed the case to federal court.1
This suit alleges that Cuisine (1) breached its contracts with
Brokerwood U.S. by delivering products late and delivering sub-
standard products; (2) improperly used Brokerwood U.S.’s customer
1
EDC had not been served when Cuisine removed the case.
3
lists; and (3) violated the Louisiana Unfair Trade Practices and
Consumer Protection Law, LA. REV. STAT. ANN. § 51:1401 et seq.
The Louisiana suit was followed by two others in Canada.
Cuisine sued Brokerwood U.S. in June 2002, and on July 8, 2002,
Brokerwood Canada sued Cuisine for commissions allegedly due
under the Agency Agreement. In the Cuisine-brought suit,
Brokerwood U.S. lost a challenge to the Canadian court’s personal
jurisdiction over it. In that suit, Brokerwood U.S. filed
counterclaims, including some for failure to pay commissions.
In July 2002, around the time that the second Canadian suit
was filed, EDC answered the Louisiana suit. Cuisine and EDC
filed their initial disclosures shortly thereafter. Cuisine and
EDC served discovery requests and filed a motion to strike
Brokerwood U.S.’s jury demand. Little else happened until
December 2002, when Brokerwood U.S.’s counsel filed a motion to
withdraw, and Brokerwood U.S.’s current lawyers stepped in.
Brokerwood U.S.’s new lawyers moved for a continuance of the
April 2003 trial date. The district court granted this motion
over Cuisine’s and EDC’s opposition.
In mid-December, Cuisine filed a motion to preclude, in
which it sought to prevent Brokerwood U.S. from calling expert
witnesses, from calling witnesses other than those already
disclosed, and from presenting evidence on lost profits. The
district court denied this motion.
After this denial, both Cuisine and EDC filed motions to
4
dismiss for forum non conveniens. At the same time, EDC also
filed a motion to dismiss for lack of personal jurisdiction.2
The district court held a hearing on both motions. In May 2003,
the court denied EDC’s personal jurisdiction motion, ruling that
EDC had waived that issue, but granted both parties’ motions to
dismiss based on forum non conveniens. In response, Brokerwood
U.S. filed a motion for new trial. After conducting another
hearing, the district court denied Brokerwood U.S.’s motion.
Brokerwood U.S. timely filed a notice of appeal. EDC filed a
notice of cross-appeal.
Personal Jurisdiction: Waiver
The district court concluded that EDC waived its personal
jurisdiction objection by not moving to dismiss the case until
February 2003 – seven months after it filed its answer and
approximately one month after the district court denied Cuisine’s
motion to preclude.
Federal Rule of Civil Procedure 12(h)(1) provides, in part,
that a defendant waives its personal jurisdiction defense if the
defense “is neither made by motion under this rule nor included
in a responsive pleading or an amendment thereof permitted by
Rule 15(a) to be made as a matter of course.” EDC complied with
Rule 12(h)(1) by including its objections to personal
jurisdiction in its answer.
2
Cuisine did not challenge the district court’s
jurisdiction.
5
Nevertheless, in several cases other circuits have concluded
that a defendant may waive a properly-pleaded personal
jurisdiction defense by failing to pursue the defense after
including it in an answer.3 In reaching its waiver conclusion
here, the district court relied on one of these cases, Yeldell v.
Tutt, 913 F.2d 533 (8th Cir. 1990). In Yeldell, the defendants
“provided no more than a bald assertion in their answer that the
court lacked personal jurisdiction over them.” Id. at 539. They
proceeded through discovery, motions, a trial, and post-trial
motions, all without raising their objections to personal
jurisdiction. Id. In fact, the Yeldell defendants did not raise
the issue again until appeal. Id. The Eighth Circuit concluded
that the defendants had waived their jurisdictional defense,
holding “that their conduct in delaying consideration of this
threshold issue manifests an intent to submit to the court’s
jurisdiction.” Id.
Conduct short of waiting until appeal to litigate the
defense has resulted in waiver. For example, a defendant waived
its jurisdictional defense by suing the plaintiff in the
objectionable forum in a second suit involving the same facts.
Gen. Contracting & Trading Co., L.L.C. v. Interpole, Inc., 940
3
This circuit has discussed, in dicta, the existence of “the
well-established rule that parties who choose to litigate
actively on the merits thereby surrender any jurisdictional
objections.” PaineWebber Inc. v. Chase Manhattan Private Bank
(Switzerland), 260 F.3d 453, 459 (5th Cir. 2001).
6
F.2d 20, 23 (1st Cir. 1991). In another case, the defendants
filed their motion to dismiss for lack of personal jurisdiction
only after their motion for summary judgment on their
counterclaim had been denied. Bel-Ray Co., Inc. v. Chemrite
Ltd., 181 F.3d 435, 443-44 (3d Cir. 1999). The court in Bel-Ray
determined that the defendants had subjected themselves to
jurisdiction by moving for summary judgment on their own claims
for relief. Id. In the Ninth Circuit, a court may find waiver
of personal jurisdiction if the defendant has complied with Rule
12 only when there are “other factors militating in favor of a
finding of waiver.” Peterson v. Highland Music, Inc., 140 F.3d
1313, 1319 (9th Cir. 1998). The Peterson court gave an example
of such an other factor:
if a defendant were to engage in "sandbagging" by raising
the issue of personal jurisdiction on a motion to
dismiss, deliberately refraining from pursuing it any
further when his motion is denied in the hopes of
receiving a favorable disposition on the merits, and then
raising the issue again on appeal only if he were unhappy
with the district court's ultimate decision, then we
would not hesitate to find that the defendant had waived
any right to pursue the defense.
Id. at 1318.
Here, the district court determined that EDC’s actions
waived its defense:
[p]rior to filing the motion to dismiss EDC participated
in a scheduling conference, provided initial disclosure,
filed a motion to strike the jury demand (which was ruled
on by the court), and filed interrogatories, requests for
production, and a witness list. EDC’s actions in
extensively participating in the litigation do not
reflect a continuing objection to this court’s power to
7
exercise jurisdiction over its person.
Although we do not state a bright-line rule, we disagree with the
district court and conclude that EDC did not waive its personal
jurisdiction objection. EDC’s actions, particularly considering
that it continued to note its objection to jurisdiction at the
preliminary conference and in its discovery responses, do not
rise to the level of “sandbagging,” or participation that would
cause waiver. EDC did not file any counterclaims, much less seek
adjudication on the merits of any claims. A total of seven
months passed between EDC’s answer and its motion to dismiss,
unlike the two and a half years of active litigation in another
waiver case, Continental Bank, N.A. v. Meyer, 10 F.3d 1293, 1297
(7th Cir. 1993)(finding waiver). Furthermore, the case was
dormant during most of that time. EDC raised its objections in a
motion before the district court; it did not wait until appeal,
like the defendant in Yeldell. We are left with only an
allegation of strategic timing: that EDC waited until Cuisine’s
motion to preclude had been denied. This is not enough to waive
EDC’s jurisdictional challenge.
The Substance of EDC’s Challenge to Personal Jurisdiction
The district court, having found waiver, did not reach the
substance of EDC’s personal jurisdiction challenge. We address
the merits of that challenge now.
Personal jurisdiction over an out-of-state defendant is
8
determined by both the state’s long-arm statute and the Due
Process Clause. ICEE Distrib., Inc. v. J&J Snack Foods, 325 F.3d
586, 591 (5th Cir. 2003). The Louisiana long-arm statute
“extends jurisdiction over nonresidents to the extent allowed by
federal due process.” Id. Thus, we need only examine whether
the exercise of jurisdiction over EDC in Louisiana would offend
due process.
Due process permits a court to exercise jurisdiction over a
nonresident defendant only if two requirements are met. First,
the defendant must have sufficient minimum contacts with the
forum so that he would reasonably anticipate being pulled into
court in that forum. Gundle Lining Constr. Corp. v. Adams County
Asphalt, Inc., 85 F.3d 201, 204 (5th Cir. 1996). Second, the
exercise of jurisdiction in the forum must not offend
“traditional notions of fair play and substantial justice.” Id.
(quoting Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102.
113 (1987)). Minimum contacts fall into two different
categories: contacts sufficient to establish general personal
jurisdiction in the forum and those sufficient to establish
specific jurisdiction. Alpine View Co. v. Atlas Copco AB, 205
F.3d 208, 215 (5th Cir. 2000). Specific jurisdiction arises when
the defendant “has purposefully directed its activities at the
forum state and the ‘litigation results from alleged injuries
that 'arise out of or relate to' those activities.’" Id. (quoting
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)).
9
“General jurisdiction, on the other hand, will attach where the
nonresident defendant's contacts with the forum state, although
not related to the plaintiff's cause of action, are ‘continuous
and systematic.’” Alpine View, 205 F.3d at 215 (quoting
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
415-16 (1984)). Brokerwood U.S. contends that the district court
had both specific and general jurisdiction over EDC.
Specific Jurisdiction
Brokerwood U.S. bases its specific jurisdiction argument on
the idea that the effects of EDC’s actions were felt in
Louisiana. In particular, Brokerwood U.S. argues that EDC’s
refusal to cover its receivables affected its ability to do
business and that Brokerwood, as a Louisiana company, felt this
harm in Louisiana. Because of this connection, Brokerwood U.S.
contends that jurisdiction is appropriate in Louisiana. To
support this contention, Brokerwood U.S. relies on the “effects
test” found in Calder v. Jones, 465 U.S. 783 (1984). In Calder,
the Supreme Court concluded that libel defendants could be
subject to personal jurisdiction in California because it was
“the focal point both of the story and of the harm suffered.
Jurisdiction over petitioners is therefore proper in California
based on the ‘effects’ of their Florida conduct in California.”
Id. at 789. Brokerwood U.S. omits, however, reference to other
cases that indicate that a party may not rely solely on effects
within the forum state.
10
Foreseeable effects are part of the specific jurisdiction
analysis. But they are only one part: “[f]oreseeable injury
alone is not sufficient to confer specific jurisdiction, absent
the direction of specific acts toward the forum.” Wien Air
Alaska, Inc. v. Brandt, 195 F.3d 208, 212 (5th Cir. 1999).
Furthermore, “the effects test is not a substitute for a
nonresident's minimum contacts that demonstrate purposeful
availment of the benefits of the forum state.” Allred v. Moore &
Peterson, 117 F.3d 278, 286 (5th Cir. 1997).
Wien Air describes the effects test and also provides an
example of when it can be used to establish jurisdiction. In
Wien Air, the nonresident defendant
performed several tortious actions outside of Texas
directed towards [plaintiff] in Texas. These actions had
foreseeable effects in the forum and were directed at the
forum. These contacts take the form of letters, faxes,
and phone calls to Texas by [defendant] whose contents
contained fraudulent misrepresentations and promises and
whose contents failed to disclose material information.
For example, [plaintiff] provides a sworn affidavit from
its employee Ms. Long stating that numerous calls,
letters and faxes were made by [defendant] to [plaintiff]
in Texas, and she avers that these calls contained the
promises, assurances, and representations that are at the
heart of the lawsuit.
Id. That situation contrasts with the situation here.
Brokerwood U.S. has only alleged effects – damages – and has not
alleged or presented any evidence that EDC intentionally directed
its conduct toward Louisiana. Therefore, Brokerwood U.S. cannot
establish that the district court had specific jurisdiction over
11
EDC.4
General Jurisdiction
General jurisdiction’s “continuous and systematic contacts
test is a difficult one to meet, requiring extensive contacts
between a defendant and a forum.” Submersible Sys., Inc. v.
Perforadora Cent., S.A. de C.V., 249 F.3d 413, 419 (5th Cir.
2001) (citing 16 JAMES WM. MOORE ET AL., MOORE’S FEDERAL PRACTICE ¶
108.41[3] (3d ed. 1999)). Brokerwood U.S. attempts to meet this
standard by presenting a list of EDC’s contacts with Louisiana.
According to Brokerwood U.S., EDC’s continuous and systematic
contacts consist of sending three demand letters to Louisiana
companies – one written by EDC and the other two written by one
of EDC’s agents; filing one lawsuit in Louisiana to recover
payment; negotiating a loan with a Louisiana entity; and
marketing itself internationally (including in Louisiana) on its
website. These contacts do not reach the level of extensive
systematic and continuous contacts required for general
jurisdiction.5
4
The plaintiff has the burden of establishing jurisdiction
over the nonresident defendant. Gundle Lining, 85 F.3d at 204.
5
See, e.g., Wilson v. Belin, 20 F.3d 644, 650-51 (5th Cir.
1994)(even if possibly continuous, defendant’s contacts were not
substantial enough for general personal jurisdiction); Cent.
Freight Lines, Inc. v. APA Transp. Corp., 322 F.3d 376, 381 (5th
Cir. 2003) (no general jurisdiction in Texas even though
defendant “routinely arranges and receives interline shipments to
and from Texas and apparently sends sales people to the state on
a regular basis to develop business, negotiate contracts, and
service national accounts”).
12
Brokerwood U.S. has not established that EDC was subject to
personal jurisdiction in Louisiana. Thus, suit in Louisiana was
improper, and the claims against EDC should have been dismissed
for lack of personal jurisdiction.
Forum non conveniens
The forum non conveniens doctrine focuses on convenience.
Dickson Marine Inc. v. Panalpina, Inc., 179 F.3d 331, 342 (5th
Cir. 1999). The doctrine “presupposes at least two forums where
the defendant is [amenable] to process and simply furnishes
criteria for choice between them.” Id. With this choice, the
plaintiff’s initial choice of forum is usually respected. Id. at
342. As a doctrine, forum non conveniens is committed to the
district court’s discretion. Piper Aircraft Co. v. Reyno, 454
U.S. 235, 257 (1981). That court’s forum non conveniens
decision, therefore, “deserves substantial deference” and is only
reversed for a clear abuse of discretion. Baumgart v. Fairchild
Aircraft Corp., 981 F.2d 824, 835 (5th Cir. 1993) (quoting Piper
Aircraft, 454 U.S. at 257).
A forum non conveniens inquiry has several steps. First,
the defendant invoking the doctrine must establish that an
alternate forum is both available and adequate. An available
forum is one where the case and all the parties can come within
its jurisdiction. Alpine View, 205 F.3d at 221. An adequate
forum is one in which “differences in that forum’s laws would not
13
deprive the plaintiff of all remedies or result in unfair
treatment.” Empresa Lineas Maritimas Argentinas, S.A. v.
Schichau-Unterweser, A.G., 955 F.2d 368, 372 (5th Cir. 1992).
Having established an available and adequate forum, the
defendant must then show that certain private factors support
dismissal. McLennan v. Am. Eurocopter Corp., Inc., 245 F.3d 403,
424 (5th Cir. 2001). These private factors are:
(1) the relative ease of access to sources of proof; (2)
the availability of compulsory process for attendance of
unwilling, and the costs of obtaining attendance of
willing, witnesses; (3) probability of an opportunity to
view the premises, if view would be appropriate to the
action; and (4) other factors affecting the ease, speed,
and expense of trial or the enforceability of a judgment
if obtained.
Baumgart, 981 F.2d at 835-36 (footnote omitted). When examining
these factors, the court should also consider the timeliness of
the defendant’s motion. Id.
If these private interest factors do not indicate that
another forum is better suited for trial of the case, the court
should then examine certain public interest factors. Baumgart,
981 F.2d at 837. If the private interest factors do, however,
weigh in favor of dismissal, then the court does not need to
consider the public ones. Id. The public interest factors are:
[T]he administrative difficulties flowing from court
congestion; the ‘local interest in having localized
controversies decided at home’; the interest in having
the trial of a diversity case in a forum that is at
home with the law that must govern the action; the
avoidance of unnecessary problems in conflict of laws,
or in the application of foreign law; and the
unfairness of burdening citizens in an unrelated forum
14
with jury duty.
Dickson Marine, 179 F.3d at 342.
In this case, the district court concluded that Canada was
both an available and adequate forum. Continuing on, the
district court determined that the private factors weighed in
favor of dismissal and that the litigation’s focal point was
Canada. Although it was not required to, the district court also
considered the public interest factors and concluded that
Canadian courts would be “in a better position to streamline the
litigation.”
Available and Adequate Forum
Brokerwood U.S. first challenges the district court’s
conclusion that Canada is an available and adequate forum.
Concerning availability, it does not contend that Cuisine and EDC
cannot come within the Canadian court’s jurisdiction, but rather
that Brokerwood U.S. should not have to submit to jurisdiction,
which it challenged (and lost) in one of the other Canadian
suits. Nevertheless, Brokerwood U.S.’s preference not to sue in
Canada does not make Canada an unavailable forum when the
defendants are both subject to personal jurisdiction there.
Brokerwood U.S. also argues that Canada is not an adequate
forum because the Canadian court has the discretionary authority
to order Brokerwood U.S. to post a cost bond. Yet, the
possibility of a bond is not the kind of difference that makes a
15
forum inadequate. Mere differences in the foreign forum’s law do
not automatically render a foreign forum inadequate, so long as
the plaintiff is not deprived of all remedies, or is not limited
to a clearly unsatisfactory remedy. Gonzalez v. Chrysler Corp.,
301 F.3d 377, 380 (5th Cir. 2002). In fact, a forum may be
adequate even if the party’s claim would be economically unviable
in that forum. See id. at 383. In light of this precedent, a
discretionary bond, while possibly increasing the cost of
litigation, does not deprive Brokerwood U.S. of a remedy or cause
it to be treated unfairly. The possibility of a bond does not
make Canada an inadequate forum, and the district court did not
clearly abuse its discretion in concluding that Canada was both
an available and adequate forum.
Private Interest Factors
The dispute over the private interest factors primarily
comes down to two factors – the availability of witnesses and
timeliness.
Of the two, timeliness causes us more concern. A defendant
must make its forum non conveniens motion “within a reasonable
time after the facts or circumstances which serve as the basis
for the motion have developed and become known or reasonably
knowable to the defendant.” In re Air Crash Disaster near New
Orleans, La., 821 F.2d 1147, 1165 (5th Cir. 1987) (en banc),
vacated on other grounds sub nom., Pan Am. World Airways, Inc. v.
16
Lopez, 490 U.S. 1032 (1989). A defendant’s delay in filing a
forum non conviens motion will not result in waiver, but delay
does weigh heavily against granting the motion. Id.
The parties extensively argued about timeliness in the
hearing before the district court. Although the district court
did not expressly address timeliness in the order granting the
forum non conveniens motion or on the motion to reconsider, in
light of the extensive argument, we agree with the parties that
the court implicitly denied Brokerwood U.S.’s timeliness
argument.
The timeliness issue presents a close call, with strong
arguments running in both directions. Although this case had
been on file for some time, it had been fairly inactive, with
little discovery taking place. As Brokerwood U.S. argues, EDC’s
and Cuisine’s actions might give the appearance of gamesmanship
because they did not file their motions until after the court
denied Cuisine’s motion to preclude much of Brokerwood U.S.’s
evidence. In their defense, EDC and Cuisine argue that they did
not realize the similarities in the cases until after Brokerwood
U.S. supplemented its discovery responses to specify that it
sought recovery for some of the same commissions it had sought in
the Canadian lawsuit.
Turning to witnesses, the district court determined that the
location and availability of witnesses weighed in favor of the
Canadian forum. Challenging this determination, Brokerwood U.S.
17
contends that its pre-trial order inserts included a list of its
own will-call witnesses, at least half of whom resided closer to
Louisiana than to Canada. Because many of these witnesses were
in states other than Louisiana, Brokerwood U.S. cites Rivendell
Forest Products, Ltd. v. Canadian Pacific Ltd., 2 F.3d 990, 993
n.5 (10th Cir. 1993), to argue that witness availability is a
neutral factor. There are some similarities. The Rivendell
court noted that when much of its case’s proof was in Minnesota,
it would be difficult to see how British Columbia would be more
convenient than Colorado, the plaintiff’s selected forum. Id.
Brokerwood U.S. similarly argues that some of its witnesses, as
the list reflects, are in states other than Louisiana. But at
the time of the motion, Brokerwood U.S. had not supplemented its
witness list and the location of these witnesses was not before
the district court.
More importantly, Brokerwood U.S.’s argument ignores the
fact that Cuisine’s and EDC’s employees were all in Canada, and
that the Shiells – regardless of whether they are domiciled in
Montreal or New Orleans – split their time between Canada and
Louisiana. The district court did not err in concluding that the
availability of witnesses suggests that Canada would be a better
forum.
The district court balanced the relevant private interest
factors and concluded that this case belongs in Canada. Although
close, timeliness does not so alter the balance of the private
18
interest factors as to justify overriding the district court’s
discretion.6 Thus, we cannot conclude that the district court
clearly abused its discretion in dismissing this case.
Conclusion
For these reasons, we vacate the district court’s order
denying EDC’s motion to dismiss for lack of personal jurisdiction
and remand to the district court to dismiss the claims against
EDC. We affirm the district court’s order dismissing the claims
against Cuisine based on forum non conveniens.
VACATED in part, AFFIRMED in part.
6
Because the private interest factors favor dismissal, we do
not examine the public interest factors. Baumgart, 981 F.2d at
837.
19