IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 02-50702
_____________________
CENTRAL FREIGHT LINES INC.,
Plaintiff - Appellant,
versus
APA TRANSPORT CORP.,
Defendant - Appellee.
__________________________________________________________________
Appeal from the United States District Court
for the Western District of Texas
_________________________________________________________________
March 5, 2003
Before JOLLY, HIGGINBOTHAM, and MAGILL,* Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
In this appeal, we are called upon to decide whether the
district court erred in dismissing the lawsuit brought by plaintiff
Central Freight Lines, Inc. for lack of personal jurisdiction over
the defendant, APA Transport Corp. We conclude that the district
court does have personal jurisdiction over the defendant.
Accordingly, we reverse the judgment of the district court and
remand for further proceedings.
*
Circuit Judge of the Eighth Circuit, sitting by
designation.
I
Plaintiff-Appellant Central Freight Lines, Inc. (“CFL”) is a
freight delivery company located in Waco, Texas that primarily
ships freight in the southwestern United States. Defendant-
Appellee APA Transport Corp. (“APA”) is a freight delivery company
located in North Bergen, New Jersey. APA primarily ships freight
in the northeastern United States. In September 2000, the two
companies entered into an “Interline Agreement” – a standing
agreement reflecting the terms and conditions under which each
carrier could use the services of the other in the other company’s
primary region of operation. In December 2000, CFL began shipping
freight to APA’s terminal in North Bergen, New Jersey for delivery
by APA to customers in APA’s primary area of operations in the
northeastern United States.
In March 2001, CFL notified APA and its other partners-in-
shipping across the United States that CFL anticipated receiving a
two-year contract with Dell Computers to deliver Dell freight from
the Western District of Texas to Dell customers across the United
States. At this time, CFL requested that each of its partners
determine if it could profitably handle Dell’s shipments to its
respective region of operation based on a “D-83" pricing
methodology and the other terms and conditions provided by their
respective interline agreements with CFL.1 APA apparently agreed
1
The precise details of the D-83 pricing methodology are
not particularly relevant to the disposition of the issue of
2
to complete CFL’s shipments of Dell merchandise in accord with
their Interline Agreement. In alleged reliance upon the pricing
information provided by APA and CFL’s other partners-in-shipping,
CFL entered into a contract with Dell Computers in March 2001. APA
began receiving shipments of Dell merchandise at its terminal in
New Jersey the following month.2
At some point shortly thereafter, business dealings between
CFL and APA soured. CFL alleges that APA breached their Interline
Agreement by demanding prices for the delivery of Dell’s freight of
194% of the negotiated and accepted rate. CFL also alleges that
APA wrongfully withheld delivery of Dell’s freight until CFL
indicated that it would pay APA and wrongfully refused to accept
additional deliveries. For its part, APA alleges that CFL failed
to pay APA approximately $430,254 for APA’s share of freight
charges. Both parties agree that CFL stopped shipping Dell freight
to APA in early June 2001 and found an alternative carrier to ship
freight to the northeastern United States.
CFL filed this action against APA on June 28, 2001, in the
Western District of Texas, alleging breach of contract, breach of
fiduciary duty, negligent misrepresentation, and tortious
interference with CFL’s contractual relationship with Dell. On
personal jurisdiction.
2
Under the terms of the Interline Agreement, APA
apparently could have “interlined” freight to CFL for delivery in
Texas and the southwestern United States, but APA apparently never
did so. Only CFL interlined freight to APA.
3
August 7, 2001, APA filed a motion to dismiss CFL’s complaint for
lack of personal jurisdiction or for improper venue or, in the
alternative, to transfer venue to the District of New Jersey.
APA then filed a separate action against CFL on July 20, 2001,
in the District of New Jersey, apparently alleging breach of
contract claims against CFL arising out of CFL’s alleged failure to
pay APA its share of freight revenues for shipments delivered by
APA pursuant to the Interline Agreement. (APA’s case is A-P-A
Transport Corp. v. Central Freight Lines, Inc., Cause No. 01-CV-
3445 (D.N.J.).) Upon CFL’s motion, the New Jersey district court
stayed the proceedings in its court until such time as the Western
District of Texas ruled on APA’s motions to dismiss or transfer.
Following limited expedited discovery regarding jurisdiction
and venue, on June 6, 2002, the Western District of Texas granted
APA’s motion to dismiss for lack of personal jurisdiction, finding
that APA did not have sufficient contacts with the State of Texas
to support the court’s exercise of specific or general personal
jurisdiction over the defendant. CFL timely appealed that
judgment. CFL also filed a motion for an expedited appeal that was
granted by this court on September 27, 2002.3
3
On July 18, 2002, after the Western District of Texas
granted APA’s motion to dismiss, the District of New Jersey
terminated its stay of APA’s action against CFL and restored APA’s
case to active status. CFL answered APA’s complaint and filed a
counterclaim against APA several days later. According to the
parties, CFL’s counterclaim asserts claims against APA that are
identical to the claims that CFL has asserted in this case.
Discovery has commenced in that litigation and, according to the
4
II
This court reviews a district court's dismissal for lack of
personal jurisdiction de novo. Alpine View Co. v. Atlas Copco
A.B., 205 F.3d 208, 214 (5th Cir. 2000). When, as here, the
district court did not conduct an evidentiary hearing on
defendant’s motion to dismiss, the party seeking to assert
jurisdiction is required only to present sufficient facts to make
out a prima facie case supporting jurisdiction. Id. (citing
cases). The court shall accept as true that party’s uncontroverted
allegations (so long as the allegations are not merely conclusory)
and resolve all factual conflicts in favor of the party seeking to
invoke the court’s jurisdiction. Id. (citing cases).
In a diversity action, a federal court may exercise personal
jurisdiction over a defendant only to the extent permitted by the
applicable law of the forum state. See Fed. R. Civ. P. 4(e)(1),
(h)(1), and (k)(1). In this case, it is well-established that the
Texas long-arm statute authorizes the exercise of personal
jurisdiction to the full extent allowed by the Due Process Clause
of the Fourteenth Amendment. See 2 Tex. Civ. Prac. & Rem. Code
Ann. § 17.042 (West 1997); Alpine View, 205 F.3d at 214; Schlobohm
v. Schapiro, 784 S.W. 2d 355, 357 (Tex. 1990).
The Due Process Clause of the Fourteenth Amendment protects an
individual's liberty interest in not being subject to the binding
District of New Jersey docket, a pretrial schedule order has
established April 1, 2003, as a discovery cutoff date.
5
judgments of a forum with which he has established no meaningful
“contacts, ties, or relations.” Int'l Shoe Co. v. Washington, 326
U.S. 310, 319 (1945). Exercising personal jurisdiction over a
nonresident defendant is consistent with constitutional due process
when “(1) that defendant has purposefully availed himself of the
benefits and protections of the forum state by establishing
‘minimum contacts’ with the forum state; and (2) the exercise of
jurisdiction over that defendant does not offend ‘traditional
notions of fair play and substantial justice.’” Mink v. AAAA
Development LLC, 190 F.3d 333, 336 (5th Cir. 1999) (quoting
International Shoe Co., 326 U.S. at 316 (1945)). “‘Minimum
contacts’ can be established either through contacts sufficient to
assert specific jurisdiction, or contacts sufficient to assert
general jurisdiction." Id.; Alpine View, 205 F.3d at 215. When
a nonresident 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,” the defendant’s
contacts are sufficient to support the exercise of specific
jurisdiction over that defendant. See Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 (1985) (internal quotation marks
omitted). General jurisdiction may be asserted when a defendant’s
contacts with the forum state are substantial and “continuous and
systematic” but unrelated to the instant cause of action. See
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 n.8 (1984).
6
A. Contacts Sufficient To Establish General Jurisdiction
APA does not appear to have the kind of substantial,
continuous, and systematic contacts with the State of Texas
sufficient to support an exercise of general jurisdiction in this
case. See Alpine View 205 F.3d at 217-18. See also Helicopteros
Nacionales de Colombia, 466 U.S. at 414; Perkins v. Benguet
Consolidated Mining Co., 342 U.S. 437 (1952)(upholding the exercise
of general jurisdiction where corporation had temporarily relocated
its principal place of business to forum state by conducting
meetings in the state, maintaining records and bank accounts in the
state and making all important business decisions in the forum
state). In this case, although APA has federal operating authority
in Texas, APA has never registered to do business in the state, has
never maintained any kind of business office or records in the
state, and has never paid franchise taxes in the state. Likewise,
even though APA 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, APA has never actually operated any
trucks or picked up or delivered any freight in Texas. Even if
APA’s contacts with the state of Texas have been, in some sense,
“continuous and systematic,” APA’s activities, in toto, are clearly
not substantial enough to justify subjecting APA to suit in the
Western District of Texas based on a theory of general personal
7
jurisdiction. See Wilson v. Belin, 20 F.3d 644, 649-51 (5th Cir.
1999) (distinguishing Perkins on this basis and holding that court
lacked general personal jurisdiction over the defendant, despite
the fact that defendant had a relationship with a Texas law firm
and engaged in various professional and pro bono projects in the
State over a period of several years).4
B. Contacts Sufficient To Establish Specific Jurisdiction
Specific jurisdiction is another matter, however. APA does
appear to have contacts with the State of Texas related to the
transaction and events giving rise to this specific cause of action
that are sufficient to support specific jurisdiction. See Burger
King, 471 U.S. at 474-79.
The record supports that APA sent two representatives to Texas
in August of 2000 to meet with CFL at its headquarters in Waco.
APA provided CFL with information about APA. It also obtained
information about CFL with the hope of finding a partner in Texas
to interline freight to the East Coast. Although the district
described this merely as a trip “for the purpose of looking for
additional business,” there seems to be no serious dispute that
4
CFL argues that APA has substantial, continuous, and
systematic contacts with the State of Texas through the operation
of APA’s website. See Brief of Appellant at 18-19 (citing Mink v.
AAAA Development, L.L.C., 190 F.3d 333 (5th Cir. 1999)). This
argument is meritless. There is no evidence that APA has ever
entered into contracts, conducted business transactions, or
otherwise interacted with Texas residents via its website.
8
this meeting led the parties to negotiate and enter into their
Interline Agreement.5 Furthermore, although the parties dispute
whether the formal negotiations of the Interline Agreement took
place in Waco, Texas or North Bergen, New Jersey, the record
appears to indicate that all of the formal negotiations took place
via telephone and written correspondence between the two parties
from their respective headquarters. In other words, APA can not
really dispute the fact that, during the course of negotiations,
APA specifically and deliberately “reached out” to a Texas
corporation by telephone and mail with the deliberate aim of
entering into a long-standing contractual relationship with a Texas
corporation. See Burger King, 471 U.S. at 479-80 (holding that
Rudzewicz “reached out” beyond Michigan and made contact with
Florida when he negotiated with a Florida corporation (Burger King)
for a franchise that envisioned long-term connections between his
business and Burger King in Florida and communicated with the
corporation by mail and by telephone).
Furthermore, by entering into the Interline Agreement, APA
knew that it was affiliating itself with an enterprise based
5
In its brief, APA relies heavily on the district court’s
characterization of the facts in the record and the allegations in
the complaint. APA’s reliance on the district court findings and
characterizations is misplaced. It is well established that this
court reviews a district court order dismissing a complaint for
lack of jurisdiction de novo. Under the circumstances, there is
no basis in law for this court to defer to the district court’s
characterizations of jurisdictional facts, especially when those
characterizations were made without the benefit of an evidentiary
hearing.
9
primarily in Texas. Cf. Burger King, 471 US. at 480 (making
essentially the same point about a Michigan defendant who entered
into a franchise agreement with Florida-based Burger King). See
also Travelers Health Ass’n v. Virginia, 339 U.S. 643, 647 (1950)
(upholding personal jurisdiction based on the fact that defendant
created “continuing obligations” between himself and a resident of
the forum). Furthermore, APA presumably knew that many of CFL’s
customers would also come from that state. Although APA does not
appear to have ever picked up freight for CFL in Texas or delivered
freight to CFL or customers in Texas pursuant to the Interline
Agreement, there can be no question that APA took “purposeful and
affirmative action” by entering into the Interline Agreement,
providing CFL with pricing and shipping information, and agreeing
to accept shipments by CFL from Texas for Texas customers that had
the clearly “foreseeable” effect of “causing business activity in
the forum state.” See Mississippi Interstate Express, Inc. v.
Transpo, Inc., 681 F.2d 1003, 1007 (5th Cir. 1982). See also
Burger King, 471 U.S. at 476 (holding that specific personal
jurisdiction cannot be avoided merely because the defendant did not
physically enter the state and that it may be based on actions that
are purposefully directed toward a resident of a forum state.)6
6
Of course, the “unilateral activity” of a plaintiff who
claims some relationship with a nonresident defendant alone cannot
satisfy the requirement of contact with the forum state. Burger
King, 471 U.S. at 474 (quoting Hanson v. Denckla, 357 U.S. 235, 253
(1958)). However, a defendant can purposefully contact the forum
state and avail itself of the benefits and protections of the
10
These contacts by APA with the state of Texas cannot be
characterized as “random,” “fortuitous,” or “attenuated.” See
Burger King, 471 U.S. at 474, 478-80. Although the Interline
Agreement apparently does not contain a forum selection clause, a
choice of law clause, or some other provision that could have put
APA on specific notice that it might be amenable to suit in Texas,
see id. at 481, neither does the Agreement contain any provision
that would give APA reason to think that it could not be haled into
court in Texas in the event that APA allegedly breached its
agreement with CFL. Cf. Marathon Oil, 182 F.3d 291, 295 (5th Cir.
1999) (no general or specific personal jurisdiction based on the
presence of defendant at three business meetings in Texas where the
contract at issue contained clauses providing for Swedish
arbitration according to Norwegian law). Under any “highly
realistic” and non-“mechanical” understanding of the Interline
Agreement, its negotiations, and its future consequences for the
parties’ business relationship, it is clear that APA purposefully
directed its in-state and out-of-state activities at a resident of
forum’s laws by creating continuing obligations between itself and
residents of the forum. Id. Thus, this circuit has held that a
nonresident can establish contact with the forum by taking
purposeful and affirmative action, the effect of which is to cause
business activity (foreseeable by the defendant) in the forum
state. Mississippi Interstate Express, Inc. v. Transpo, Inc., 681
F.2d at 1007. Although Transpo was decided several years before
Burger King, the Supreme Court’s landmark decision on the
constitutional foundation of personal jurisdiction in contract
cases, there is nothing in Transpo that seems inconsistent with
Burger King.
11
the forum (namely, CFL) with the aim of establishing a long-term
association with that resident and with the foreseeable and
intended result of causing economic activity within the forum
state. Based on these facts, APA should have reasonably
anticipated being haled into court in Texas on breach of contract
claims related to that Interline Agreement, notwithstanding APA’s
relatively brief physical presence in the state. See Burger King,
471 U.S. at 474-75.
Furthermore – and quite apart from the ultimate merits of the
claim – APA should have reasonably anticipated being haled into
court in Texas on alleged intentional tort claims that are directly
related to APA’s performance under the Interline Agreement. See
Calder v. Jones, 465 U.S. 783, 789 (1984) (holding defendant
subject to personal jurisdiction in California based on foreseeable
effects in that state of allegedly libelous conduct committed in
Florida). Although mere allegations of tortious interference with
a forum resident’s contractual rights are not sufficient to
establish specific personal jurisdiction, see Panda Brandywine
Corp. v. Potomac Electric Power Co., 253 F.3d 865 (5th Cir. 2001)
(affirming dismissal for lack of personal jurisdiction), it is
clear that specific personal jurisdiction may be based on
intentionally tortious conduct that is purposefully directed toward
the forum state. Id. at 869. While we express no view on the
ultimate merits of CFL’s intentional tort claims, at this stage of
the proceeding we are obligated to assume CFL’s non-conclusory
12
allegations are true. Alpine View, 205 F.3d at 214. Based on
CFL’s complaint, we find that CFL has pled facts that are
sufficient to show that APA committed intentional torts that were
purposefully directed at APA’s contractual business relationship
with another Texas entity. Specifically, CFL has alleged that APA
was aware of CFL’s contractual relationship with Dell Computers and
that APA intentionally attempted to interfere with that
relationship by holding Dell freight hostage in New Jersey and by
manipulating the price of freight delivery in the northeast. CFL
has alleged further that APA’s actions actually harmed the
relationship between CFL and Dell Computers resulting in damages
above the statutory minimum for federal diversity jurisdiction.
See Plaintiff’s First Amended Complaint ¶ 4.04. Although APA’s
alleged tortious actions apparently involved physical assets held
by APA in New Jersey, it is no “mere fortuity” that CFL allegedly
suffered injury in Texas as a result of APA’s conduct. Cf. Panda
Brandywine Corp., 253 F.3d at 869-70. Texas is not only CFL’s home
state; it is also the primary location of CFL’s business
relationship with Dell Computers. Under the circumstances, it is
not unreasonable for APA to be haled into court in the Western
District of Texas for alleged intentional interference with the
contractual relationship of two Texas-based companies whose
business dealings are based in Texas. Id.7
7
In contrast in Panda Brandywine Corp., a panel of this
court held that the district court lacked personal jurisdiction
13
C. Traditional Notions Of Fair Play And Substantial Justice
Once a plaintiff establishes minimum contacts between the
defendant and the forum State, the burden of proof shifts to the
defendant to show that the assertion of jurisdiction is unfair and
unreasonable. Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 215
(5th Cir. 1999). The defendant must make a “compelling case.”
Burger King, 471 U.S. at 477. In determining whether the exercise
of jurisdiction is fair and reasonable, the court must balance: (1)
the burden on the nonresident defendant of having to defend itself
in the forum; (2) the interests of the forum state in the case;
(3) the plaintiff's interest in obtaining convenient and effective
relief; (4) the interstate judicial system's interest in the most
efficient resolution of controversies; and (5) the shared interests
of the states in furthering fundamental social policies. Id. See
generally Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102,
115 (1987).
In this case, APA argues that the company will be
substantially burdened if it is required to send executives and
records to defend the company in Texas; that the State of Texas
itself has little interest in this case compared to New Jersey; and
that CFL’s interest in litigating the case in Texas is purely
over defendant in Texas for tortious interference with the
financing arrangements of a Maryland power generating plant.
According to the court, personal jurisdiction was lacking because
defendant’s alleged tortious interference had “no relation to Texas
other than the fortuity that [the plaintiffs] reside[d] there.”
Id.
14
strategic in nature and very slight compared to the burden that
will be placed on APA if APA is required to defend itself in Texas.
None of these arguments persuasively demonstrates that “traditional
notions of fair play and substantial justice” would be offended by
asserting personal jurisdiction over APA in this case. As CFL
argues in its brief, the burden of requiring APA to litigate in
Texas is no greater than the burden of requiring CFL to litigate in
New Jersey. Furthermore, Texas would seem to have an interest in
adjudicating its domiciliary’s alleged breach of contract and
tortious interference claims that is sufficient to satisfy Due
Process concerns about traditional notions of fair play and
substantial justice. CFL’s interest in obtaining convenient and
effective relief also suggests that the Western District of Texas
is not an unfair or unjust place to litigate this dispute. As CFL
argues, the Western District of Texas has subpoena power over
documents and witnesses of Dell Computers that may be necessary to
prove CFL’s tortious interference claims against APA.
At this point, the only interest that might arguably cut
against the assertion of personal jurisdiction in this case is the
interstate judicial system's interest in the most efficient
resolution of controversies. As noted above, CFL has filed a
counterclaim in A-P-A Transport Corp. v. Central Freight Lines,
Inc., Cause No. 01-CV-3445 (D.N.J.) that asserts claims that are
identical to the claims asserted in this case. Under normal
circumstances, the first to file rule would point to the Western
15
District of Texas as the appropriate forum for the adjudication of
all the claims arising out of the parties’ alleged conduct under
the Interline Agreement. However, in this case, litigation has
been proceeding in the District of New Jersey for six months during
the pendency of this appeal. On account of this, the District of
New Jersey might conceivably be the most efficient place to resolve
the parties’ controversies. Nevertheless, even if the District of
New Jersey is a marginally more efficient forum for resolution of
these claims at this point, asserting personal jurisdiction over
APA in this case would not seem to be unconstitutionally offensive
to traditional notions of fair play and substantial justice.8
In short, APA has failed to present a compelling case in
support of its claim that asserting personal jurisdiction in this
case would be offensive to traditional notions of fair play and
substantial justice. See Burger King, 471 U.S. at 477.
8
On remand to the Western District of Texas, the district
court may be called upon to decide whether to transfer the case to
the District of New Jersey. Similarly, the New Jersey district
court may be asked to consider whether it should transfer the cases
filed there under the “first to file” rule that prevails in the
federal courts. Western Gulf Maritime Association v. Ila Deep Sea
Local 24, South Atlantic and Gulf Coast District of the Ila; AFL,
751 F.2d 721, 728-29 (5th Cir. 1985) (holding that the court with
prior jurisdiction over the common subject matter should resolve
all issues presented in related actions). Because the question of
venue is not properly before us on appeal, we express no view on
the subject, and our opinion today should not be construed by any
court to suggest otherwise.
16
III
In sum, we conclude that APA may not avoid the personal
jurisdiction of the Western District of Texas merely because APA
did not physically enter the State of Texas to deliver freight to
customers or interline freight to CFL for delivery to some other
final destination in the southwestern United States. See Burger
King, 471 U.S. at 476. Although territorial presence and activity
will frequently enhance a defendant’s relationship to the forum
state and reinforce the reasonableness of subjecting it to suit
there, an inescapable fact of modern life dictates that a
substantial amount of business will be transacted by mail and by
electronic wire communications across state lines. Id. So long as
a commercial actor’s efforts are “purposefully directed” toward a
resident of another State, the mere absence of physical contacts
within the forum state cannot defeat personal jurisdiction there.
Id. In this case, APA clearly did purposefully “reach out” to CFL
in Texas by visiting CFL’s headquarters and engaging in
negotiations with CFL by mail and by telephone. Furthermore, APA
clearly did so with the goal of establishing a long-term
association with CFL and with the foreseeable result of causing
economic activity within the forum state. On account of this, APA
had fair warning that it could be sued in Texas for alleged breach
of the Interline Agreement and for alleged intentional torts
arising out of its performance under that agreement. Accordingly,
17
we REVERSE the judgment of the district court and REMAND for
further proceedings.
REVERSED AND REMANDED.
18
Central Freight Lines Inc. v. APA Transport Corp.
Court: Court of Appeals for the Fifth Circuit
Date filed: 2003-03-05
Citations: 322 F.3d 376
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