Case: 10-60892 Document: 00511743241 Page: 1 Date Filed: 01/31/2012
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
January 31, 2012
No. 10-60892
Lyle W. Cayce
Clerk
ITL INTERNATIONAL, INCORPORATED, doing business as Mars
Caribbean and Central America, doing business as Master Foods
Interamerica; MARS INCORPORATED,
Plaintiffs – Appellants
v.
CONSTENLA, S.A.; GRUPO CONSTENLA, S.A.,
Defendants - Appellees
Appeal from the United States District Court
for the Southern District of Mississippi
Before HIGGINBOTHAM, OWEN, and HAYNES, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
ITL International, formerly known as Master Foods Interamerica (“MFI”),
and its parent company Mars, Inc. filed this declaratory judgment action in
federal district court in Mississippi, seeking relief against their longtime Costa
Rican distributor. The district court dismissed the complaint for lack of personal
jurisdiction over the defendants. Failing to find specific jurisdiction under the
Due Process Clause, we affirm.
I.
This appeal arises from a declaratory judgment action filed by Mars,
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Inc.—the manufacturer of M&M’s and other candy—and its subsidiary ITL
International, formerly known as Master Foods Interamerica (“MFI”), against
their Costa Rican distributor and its parent company.
In May 1992, MFI entered into an exclusive distribution agreement with
a Costa Rican company known as Ciamesa, which was later acquired by
defendant Constenla, a subsidiary of defendant Grupo Constenla. The
agreement provided that Ciamesa would develop the Costa Rican market and
promote the sales of Mars products in Costa Rica. The agreement further
provided that “[t]his Agreement is personal to CIAMESA and it may not be
assigned or transferred, either apart from or as a part of CIAMESA’s business,
to any other party without [MFI’s] prior written approval.” The agreement did
not include a choice-of-law provision, but the parties agree that the agreement
was made in Costa Rica and is governed by Costa Rican law.
Plaintiffs contend that the agreement terminated when Ciamesa was
acquired by defendants in 1996; defendants maintain that they acquired the
distribution rights as part of the merger. Regardless, the parties continued to
abide by the distribution agreement for many years afterward, until Mars
recently decided to sell some of its products directly to Costa Rican retailers.
The record reflects that since January 2009, plaintiffs have delivered 91
shipments of goods to defendants for distribution in Costa Rica. On 55 of these
occasions, plaintiffs shipped the goods to defendants “FOB/Gulfport,
Mississippi.” The defendants requested to take possession and title to the goods
in Gulfport,1 although they insist that their decision was effectively dictated by
Mars’s quality control policies.
1
There is some dispute whether Gulfport was the site where the parties transferred possession or
merely risk of loss. The standard of review requires us to draw all inferences in favor of the plaintiffs,
and in any event, the facts indicate an actual exchange of possession from the plaintiffs’ shipper to the
defendants’ shipper in Gulfport.
2
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When plaintiffs notified defendants that they wished to revise or terminate
the exclusive distribution agreement, defendants claimed that Costa Rica Law
6209 requires a termination penalty of more than $7 million.2 Defendants argue
that the termination penalty applies regardless of their actual damages from
breach and despite the contract’s express provision that either party may
terminate the agreement by giving three-months’ written notice.
Plaintiffs subsequently filed this declaratory judgment action in federal
district court in Mississippi, seeking declarations (1) that the distribution
agreement does not restrict Mars from making other distribution arrangements
in Costa Rica, either because the agreement terminated when Constenla
acquired Ciamesa or because the plaintiffs validly terminated it; (2) that, if the
agreement applies to Constenla, then defendants breached the agreement by
demanding a severance payment under Law 6209, entitling plaintiffs to damages
and a permanent injunction preventing defendants from claiming that they are
the plaintiffs’ exclusive Costa Rican distributor; (3) that plaintiffs are not liable
to defendants for any reason and that defendants must pay any unpaid amounts;
(4) that defendants no longer have license to use Mars’s trademarks; and (5) that
any interference with plaintiffs’ contracts with other trademark licensees and
Costa Rican importers or distributors constitutes tortious interference.
Plaintiffs further allege that any termination penalty unrelated to actual
damages violates the fundamental public policy of Mississippi and cannot be
enforced. They have requested an international anti-suit injunction to prevent
defendants from seeking a judgment against them in the Costa Rican courts.
The district court dismissed the complaint for lack of personal jurisdiction
2
Law 6209 was repealed in 2007, but defendants assert that it continues to apply to contracts
signed before the repeal.
3
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over the defendants.3 The court first found that the defendants were amenable
to suit under the contract prong of the Mississippi long-arm statute4 and that
they had minimum contacts with Mississippi.5 Nevertheless, the district court
concluded that “this case is one of the rare instances when exercising jurisdiction
would be unreasonable despite the presence of minimum contacts.”6 The court
noted that the underlying claims are governed by Costa Rican law and that most
of the witnesses and evidence are located in Costa Rica.7 Plaintiffs are both
Delaware corporations with principal places of business in Virginia; neither has
offices in Mississippi, and MFI was not registered to do business in Mississippi
until after it filed suit. In the district court’s view, the plaintiffs “appear to have
chosen Mississippi because it is the state in which the Defendants have the
greatest contacts.”8 The court also explained that Costa Rica would be a
preferable forum based in part on expert testimony that Costa Rican courts
would not enforce a U.S. court judgment applying Costa Rican law against a
Costa Rican defendant, “rais[ing] the possibility that this Court’s orders would
be for nothing”9 and that allowing suit to proceed in the United States would
interfere with Costa Rica’s sovereignty and social policy.10
Plaintiffs now appeal, arguing that the defendants’ purposeful contacts
3
ITL Int’l, Inc. v. Constenla, S.A., No. 1:10CV567, 2010 WL 4537931 (S.D. Miss. Nov. 2,
2010). The court did not reach defendants’ alternative arguments for dismissal based on ineffective
service of process and forum non conveniens. Id. at *2 & n.2.
4
Id. at *4.
5
Id. at *5–6.
6
Id. at *10.
7
Id. at *8–9.
8
Id. at *8.
9
Id.
10
Id. at *9.
4
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with Mississippi render jurisdiction there fair and reasonable. Defendants argue
that allowing suit in Mississippi would violate traditional notions of fair play
and substantial justice; they also argue, as alternative grounds for affirmance,
that there was no basis for personal jurisdiction under the Mississippi long-arm
statute and that they had insufficient contacts with the state for personal
jurisdiction there to be consistent with constitutional due process.
II.
This Court reviews a district court’s dismissal for lack of personal
jurisdiction de novo.11 At this preliminary stage, the plaintiff need only make a
prima facie showing of jurisdiction.12 When the district court rules on the motion
to dismiss before holding an evidentiary hearing, the court must accept as true
all uncontroverted allegations in the complaint and must resolve any factual
disputes in favor of the plaintiff.13
III.
Our analysis proceeds in two parts.14 We first examine whether the
defendants are amenable to suit under the Mississippi long-arm statute. We
hold that they are amenable under the statute’s “doing business” prong. Next
we examine whether personal jurisdiction over this dispute comports with the
Due Process Clause of the Fourteenth Amendment. We hold that it does not, for
we find the nexus between the defendants’ contacts in Mississippi and the
nature of the dispute inadequate to support specific jurisdiction.
A. The Mississippi Long-Arm Statute
11
See McFadin v. Gerber, 587 F.3d 753, 758 (5th Cir. 2009).
12
See Luv N’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006).
13
See Stripling v. Jordan Prod. Co., 234 F.3d 863, 869 (5th Cir. 2000).
14
See McFadin, 587 F.3d at 759. As we noted in Stripling, we address each part separately
because Mississippi’s long-arm statute is not coextensive with due process. 234 F.3d at 869 n.7.
5
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Federal Rule of Civil Procedure 4(k)(1)(A) provides personal jurisdiction
over any defendant who would be subject to personal jurisdiction under the long-
arm statute of the state in which the district court sits. The Mississippi long-
arm statute authorizes jurisdiction over
[a]ny nonresident . . . who shall [1] make a contract with a resident
of this state to be performed in whole or in part by any party in this
state, or who shall [2] commit a tort in whole or in part in this state
against a resident or nonresident of this state, or who shall [3] do
any business or perform any character of work or service in this
state.15
The three prongs of the long-arm statute are commonly referred to as the
contract prong, the tort prong, and the doing-business prong. Plaintiffs argue
that jurisdiction exists under both the contract prong and the doing-business
prong. The district court found jurisdiction under the contract prong without
ruling on the doing-business prong. We likewise find jurisdiction under the long-
arm statute, but our conclusion rests on the doing-business prong rather than
the contract prong. We affirm the district court’s conclusion on this alternative
ground.16
As a preliminary matter, we must address the defendants’ argument that
plaintiffs may not avail themselves of the long-arm statute because, when MFI
first filed suit, it was not registered to do business in Mississippi and thus not
a Mississippi resident. The argument fails for two reasons. First, the first
amended complaint added Mars, Inc. as a plaintiff, and Mars has been
registered to do business in Mississippi since 2003. Second, Mississippi’s door-
closing statute contemplates that a plaintiff corporation that is not a resident
15
MISS. CODE § 13-3-57.
16
See Phillips v. Monroe Cnty., Miss., 311 F.3d 369, 376 (5th Cir. 2002) (“We ‘may affirm [the
district court’s decision] on any grounds supported by the record.’” (alteration in original) (quoting
McGruder v. Will, 204 F.3d 220, 222 (5th Cir. 2000)).
6
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upon commencing suit may cure that defect by subsequently obtaining a
certificate of authority to do business in the state, making it a state resident.17
The statute clarifies that MFI’s nonresident status when it commenced suit is
a curable defect, and because MFI has now cured it by registering as a
Mississippi resident, there is no bar to the plaintiffs’ use of the Mississippi long-
arm statute to assert personal jurisdiction over the defendants.
The statute allows jurisdiction over a nonresident defendant who is “doing
business” in the state. While this has been the plaintiffs’ principal jurisdictional
argument throughout this litigation, the district court suggested that they might
have trouble establishing jurisdiction under this prong.18 But the district court
looked to an outdated test that does not pertain to the current version of
Mississippi’s long-arm statute. Prior to 1991, Mississippi courts applied a three-
part test,19 which the district court relied on here. But following a 1991
amendment to the statute, the Supreme Court of Mississippi no longer applies
that test. That court has said, “As it stands now, the long-arm statute, by its
plain terms, applies to any person or corporation performing any character of
work in this state.”20 That broad scope encompasses the defendants’ activities
here. By using Mississippi’s ports to take possession and title of shipments of
goods, defendants performed some “character of work” within the state.21 Thus,
under current Mississippi law, the doing-business prong establishes long-arm
17
The door-closing statute, enacted in 1988, provides that “[a] court may stay a proceeding
commenced by a foreign corporation . . . until the foreign corporation . . . obtains the certificate [of
authority].” MISS. CODE § 79-4-15.02(c).
18
ITL, 2010 WL 4537931, at *4.
19
See Gross v. Chevrolet Country, Inc., 655 So. 2d 873, 877–78 (Miss. 1995).
20
See Estate of Jones v. Phillips, 992 So. 2d 1131, 1139 (Miss. 2008) (emphasis added).
21
See ITL, 2010 WL 4537931, at *3 (recognizing “55 specific instances of receiving possession
and title to Plaintiffs’ goods at the Port of Gulfport, Mississippi for shipment and sale in Costa Rica”).
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jurisdiction over the defendants in this case.22
B. Specific Jurisdiction Under the Due Process Clause
We must further consider whether adjudicating the plaintiffs’ claims in a
Mississippi forum is consistent with the Due Process Clause of the Fourteenth
Amendment. The Due Process Clause protects an individual’s liberty interest
in not being subject to the binding judgment of a forum with which he has
established no meaningful “contacts, ties, or relations.”23 Jurisdiction may be
general or specific.24 Where the plaintiff alleges specific jurisdiction, as here, due
process requires (1) minimum contacts by the defendant purposefully directed
at the forum state, (2) a nexus between the defendant’s contacts and the
plaintiff’s claims, and (3) that the exercise of jurisdiction over the defendant be
fair and reasonable.25
Due process first requires that a defendant have sufficient contacts with
the forum state such that it “should reasonably anticipate being haled into court
there.”26 This requirement can be satisfied by a showing that the defendant
“purposely directed its activities toward the forum state or purposely availed
itself of the privileges of conducting activities there.”27 The defendant’s contacts
must be more than “random, fortuitous, or attenuated, or of the unilateral
22
We do not address whether the contract prong is satisfied, and we need not address the
plaintiffs’ argument in the alternative that Federal Rule of Civil Procedure 4(k)(2) would establish
personal jurisdiction over the defendants if the long-arm statute does not.
23
Int’l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945).
24
See Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853 (2011).
25
See, McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009); Nuovo Pignone, SpA v. STORMAN
ASIA M/V, 310 F.3d 374, 378 (5th Cir. 2002).
26
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980); see Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 474 (1985).
27
Nuovo Pignone, 310 F.3d at 378.
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activity of another party or third person.”28 Unlike general jurisdiction, which
requires that the defendant’s purposeful contacts with the forum state be
“continuous and systematic,” specific jurisdiction may exist where there are only
isolated or sporadic contacts, so long as the plaintiff’s claim relates to or arises
out of those contacts.29
Plaintiffs contend that the defendants had sufficient minimum contacts
with Mississippi because they took possession and title of plaintiffs’ goods in
Gulfport on 55 occasions since January 2009, with the 55 shipments worth a
total value of $3.3 million. Plaintiffs further allege, and the district court found,
that defendants “affirmatively specif[ied] the Gulfport port” as the location
where they wished to take delivery of the goods.30 Defendants do not deny that
they were the ones who selected Gulfport as the delivery site, but they argue
that this decision was dictated in large part by factors outside their control,
including the economics of shipping goods to Central America and the need for
special refrigerated containers and warehouses.
Like the district court, we find that these 55 shipments were purposeful
contacts with Mississippi. First, the standard of review dictates that we resolve
all factual disputes in favor of the plaintiffs, and viewed in this light the facts
are sufficient to establish a prima facie case of jurisdiction. Second, defendants’
claim that they had no meaningful choice over what port to use is belied by the
fact that, during this same time period, defendants took possession of 36 other
shipments of plaintiffs’ goods at ports other than Gulfport, including 11 in
Miami. Third, even if defendants’ choice of receiving port was effectively
28
Burger King, 471 U.S. at 475 (internal quotation marks and citations omitted); accord
McFadin, 587 F.3d at 759.
29
See Luv N’ Care, 438 F.3d at 469; Nuovo Pignone, 310 F.3d at 379; see also Burger King, 462
U.S. at 475 n.18.
30
ITL, 2010 WL 4537931, at *5.
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dictated by economic and logistical considerations, the fact that they knowingly
designated Gulfport as the transfer point was enough that they should have
reasonably anticipated being haled into court in Mississippi.31 Finally, this is
not a case in which an F.O.B. term is a legal formalism unconnected with any
actual forum activity.32 Rather, physical possession as well as title transferred
to the defendants in Gulfport. By partially performing the contract in
Mississippi, defendants have availed themselves of Mississippi’s laws, logistics,
transportation, and business facilities, including the port of Gulfport.33
Defendants argue that much of the relevant activity—perhaps the vast
majority of it—had no connection to Mississippi. But the relevant inquiry for
purposes of this prong is not one of relative contacts, but only whether the
defendants had sufficient minimum contacts with the state.34 The defendants’
purposeful direction that possession and title to the goods be transferred to them
in Gulfport is sufficient for them to have reasonably anticipated being haled into
court in Mississippi. We conclude that there has been a sufficient showing of
minimum contacts to support specific jurisdiction over the defendants in
Mississippi.
But in addition to minimum contacts, specific jurisdiction only obtains
when a plaintiff’s claims “arise out of or relate to” the defendant’s purposeful
31
See Diamond Crystal Brands, Inc. v. Food Movers Int’l, Inc., 593 F.3d 1249, 1268–71 (11th
Cir. 2010).
32
See id. at 1272–73; cf. Charia v. Cigarette Racing Team, Inc., 583 F.2d 184, 188–89 (5th Cir.
1978) (holding that F.O.B. shipment, without more, is not purposeful availment of the laws of the forum
state).
33
See Luv N’ Care, 438 F.3d at 471–72 (concluding that an “F.O.B. term does not prevent a court
from exercising personal jurisdiction over a non-resident defendant where other factors, such as the
quantity and regularity of shipments, suggest that jurisdiction is proper”).
34
See Vencedor Mfg. Co. v. Gougler Indus., Inc., 557 F.2d 886, 892–93 (1st Cir. 1977).
10
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contacts with the forum.35 Or, as we have put it, “‘the plaintiff’s cause of action
[must] arise[] out of or result[] from the defendant’s forum-related contacts.’”36
This is what we find lacking. There is little nexus between the defendants’
contacts with Mississippi and the plaintiffs’ contract and trademark claims.
Although the contract was partially performed in Mississippi, the dispute
here does not arise out of or result from that partial performance.37 This dispute
concerns only trademark claims and general contract issues—transfer,
assignment, application, liability, termination, interpretation—that have, at
most, a superficial and highly attenuated connection to the minimal activity that
took place in Mississippi. In fact, this lawsuit is oriented almost exclusively
toward activity that has taken place or may eventually take place in Costa Rica,
and nothing in the facts, claims, causes of action, or prayer sections of the
complaint makes reference to Mississippi or to activity that took place there.
This case is not about damaged goods delivered in Gulfport but rather about
distribution in Costa Rica and associated contract and trademark issues. The
contract claims present rather abstract questions of law that have no relation to
passing the goods from plaintiffs to defendants in Gulfport. Indeed, plaintiffs
allege no injury flowing from the transport of the goods,38 and neither party to
the contract was a Mississippi resident when the contract was made or
35
Burger King, 471 U.S. at 472 & n.15 (citing Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408, 414 & n.9 (1984)); see also Goodyear, 131 S. Ct. at 2853.
36
Luv N’ Care, 438 F.3d at 469 (quoting Nuovo Pignone, 310 F.3d at 378).
37
Cf. Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 275 (5th Cir. 2006) (dismissing a
defective design claim for lack of personal jurisdiction where contacts were present but where they did
not give rise to the claim); Nuovo Pignone, 310 F.3d at 381–82 (concluding that claims about the
performance of a contract “necessarily arise out of” forum contacts established by that contract).
38
See Ham v. La Cienega Music Co., 4 F.3d 413, 416 (5th Cir. 1993) (denying jurisdiction
because there was a “highly attenuated” relationship between the defendant’s contact with the forum
state and plaintiff’s declaratory judgment action for copyright infringement, which “allege[d] no injury
flowing from” the contact).
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performed.39 The trademark claim is even more remote from the Mississippi
activity.40 Whether the defendants took possession of the goods in Mississippi,
Florida, or some other state makes no difference to the claims in this lawsuit.
Partial performance in a state, without more, does not provide an adequate
nexus with claims that do not arise out of or result from that performance.
In sum, even if the defendants could reasonably anticipate being haled into
Mississippi federal court, they could not reasonably anticipate being so haled to
answer claims such as these. Seeing no constitutionally adequate nexus
between the plaintiffs’ claims and the defendants’ Mississippi contacts, we
conclude that the plaintiffs have failed to present a prima facie case that a
Mississippi district court may exercise specific jurisdiction over the defendants.41
IV.
For the foregoing reasons, we AFFIRM the district court’s dismissal for
lack of jurisdiction and DENY as moot the motion for an international anti-suit
injunction.
39
MFI registered to do business in Mississippi only after commencing suit. Mars, Inc., the other
plaintiff and a Mississippi resident since 2003, was not a party to the contract and is involved in the case
instead as the owner of the relevant trademarks.
40
Cf. J. Stephen Scherer, Inc. v. Revelations Antoine Ltee, 845 F.2d 1033 (Fed. Cir. 1988)
(unpublished table decision).
41
Finding the second prong of the due process inquiry unsatisfied, we do not reach the “fair and
reasonable” prong. It was on the third prong that the district court found jurisdiction lacking, but we
again affirm its conclusion on an alternative ground. See supra note 16 and accompanying text.
12