F I L E D
United States Court of Appeals
Tenth Circuit
November 8, 2005
PUBLISH
UNITED STATES COURT OF APPEALS Clerk of Court
TENTH CIRCUIT
PRO AXESS, INC.,
Plaintiff - Appellant / Cross -
Appellee,
v.
ORLUX DISTRIBUTION, INC.,
Nos. 03-4179, 03-4189
Defendant / Cross - Appellant,
and
SPOROPTIC POUILLOUX, INC.,
Defendant - Appellee / Cross -
Appellant.
Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:97-CV-230-TS)
J. Mark Gibb, Durham Jones & Pinegar, P.C., Salt Lake City, Utah (Stephen
Marshall, Durham Jones & Pinegar, P.C., Salt Lake City, Utah, with him on the
briefs), for Plaintiff-Appellant/Cross-Appellee.
Gifford W. Price, Mackey Price Thompson & Ostler, Salt Lake City, Utah
(Gregory N. Jones, Mackey Price Thompson & Ostler, Salt Lake City, Utah, with
him on the briefs), for Defendant/Cross-Appellant and Defendant-Appellee/Cross-
Appellant.
Before EBEL, Circuit Judge, HENRY, Circuit Judge, and WHITE, District
Judge. *
EBEL, Circuit Judge.
This case arises from a contract dispute between Defendant Sporoptic
Pouilloux, S.A. (“Sporoptic”), 1 a French company, and Plaintiff Pro Axess, Inc.
(“Pro Axess”), a Utah corporation. The parties raise cross-appeals from a
judgment and an associated order entered following a jury trial. Sporoptic, which
was held liable for breach of contract, contests the district court’s exercise of
personal jurisdiction over it. Pro Axess, the prevailing party below, appeals the
district court’s denial of its post-trial motion for prejudgment interest. We
AFFIRM the district court’s judgment because we conclude that the court’s
exercise of personal jurisdiction over Sporoptic was proper. We also AFFIRM
the district court’s denial of Pro Axess’s motion for prejudgment interest.
*
Honorable Ronald A. White, District Court Judge, United States District
Court for the Eastern District of Oklahoma, sitting by designation.
1
Sporoptic refers to itself as both “Sporoptic Pouilloux, Inc.” and
“Sporoptic Pouilloux, S.A.” We refer to the company as “Sporoptic” to avoid
confusion.
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BACKGROUND
Sporoptic distributes sunglasses. In the mid-1990s, Sporoptic decided to
launch a line of low-cost sunglasses in the United States. To minimize the cost of
manufacturing these sunglasses, Sporoptic sought to manufacture the frames for
the sunglasses in Asia.
Acting both directly and through its wholly-owned subsidiary, Orlux
Distribution, Inc. (“Orlux”)—a California corporation with responsibility for
distributing Sporoptic’s sunglasses in the United States—Sporoptic contacted Pro
Axess to make the arrangements necessary for such manufacturing. Sporoptic
lacked experience dealing with Asian manufacturers, while Pro Axess regularly
arranged for the manufacture of sunglasses frames in Asia on behalf of
distributors like Sporoptic. In fact, Pro Axess had previously arranged to supply
Asian-manufactured sunglasses frames to Sporoptic.
As part of this project, in 1995 Sporoptic contracted with Pro Axess to
arrange for the manufacture and delivery of 28,000 sunglasses frames. Sporoptic
later cancelled this order. The parties disagreed about whether the order was
cancelled in a timely fashion or whether the cancellation was a breach of contract.
In January 1997, Pro Axess filed suit against Sporoptic and Orlux in Utah
state court, alleging alternative claims based on breach of contract, promissory
-3-
estoppel, and misuse of an open credit account. In March 1997, Sporoptic and
Orlux removed the case to federal court.
In its answer, Sporoptic disputed the district court’s ability to exercise
personal jurisdiction over it. The court noted this dispute in its pretrial order but
did not rule on the issue. Following a three-day trial in March 2002, a jury found
that Sporoptic had breached its contract with Pro Axess and awarded damages of
$156,264 to Pro Axess. The jury found that Orlux did not have a contract with
Pro Axess and thus had no liability in this case.
After trial, the parties litigated the issue of whether the district court could
exercise personal jurisdiction over Sporoptic. The court held that it could, and
thereafter entered judgment— erroneously—in favor of Pro Axess against both
Sporoptic and Orlux.
The parties filed motions to amend the judgment. In June 2003, the district
court denied Pro Axess’s motion for prejudgment interest, granted Pro Axess’s
motion for postjudgment interest, and granted Sporoptic and Orlux’s motion to
amend the judgment to reflect that it lay only against Sporoptic. The court
entered its judgment on July 31, 2003.
On July 18, 2003—before the district court entered judgment—Pro Axess
filed a notice of appeal. Sporoptic cross-appealed on August 1, 2003.
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DISCUSSION
We exercise jurisdiction over these appeals pursuant to 28 U.S.C. § 1291. 2
I. Personal Jurisdiction
We review de novo the district court’s decision to exercise personal
jurisdiction over Sporoptic. See Fed. Deposit Ins. Corp. v. Oaklawn Apartments,
959 F.2d 170, 173 (10th Cir. 1992). Pro Axess has the burden of proving that the
court’s exercise of jurisdiction was proper, though it must do so only by a
preponderance of the evidence. See Karnes v. Boeing Co., 335 F.3d 1189, 1194
(10th Cir. 2003); Soma Med. Int’l v. Standard Chartered Bank, 196 F.3d 1292,
1295 (10th Cir. 1999) (examining the issue of personal jurisdiction over non-
resident defendants in federal court in Utah).
2
Although Pro Axess filed its notice of appeal before the district court
entered the final judgment in this case, Pro Axess’s appeal is timely under Fed. R.
App. P. 4(a)(4)(A)(iv), 4(a)(4)(B)(i), and 4(a)(1)(A). Sporoptic’s cross-appeal is
timely under Fed. R. App. P. 4(a)(3).
Sporoptic’s notice of appeal also names Orlux as an appellant. However,
Sporoptic’s first brief on appeal does not appear to raise an argument on behalf of
Orlux, as that brief merely challenges the district court’s exercise of personal
jurisdiction over Sporoptic and argues that Pro Axess is not entitled to
prejudgment interest on the judgment, which did not lie against Orlux. To the
extent that Sporoptic’s first brief does not raise an argument on behalf of Orlux,
any arguments that Orlux might have asserted in this appeal are waived. See
State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 984 n.7 (10th Cir. 1994). To
the extent that the arguments in Sporoptic’s first brief are raised on behalf of
Orlux, Orlux lacks standing to assert such arguments because it has not suffered
an injury in fact. See Nova Health Sys. v. Gandy, 416 F.3d 1149, 1154 (10th Cir.
2005). Thus, we must treat Sporoptic and Orlux’s cross-appeal as though
Sporoptic were the only party named in the notice of appeal.
-5-
“To obtain personal jurisdiction over a nonresident defendant in a diversity
action, a plaintiff must show that jurisdiction is legitimate under the laws of the
forum state and that the exercise of jurisdiction does not offend the due process
clause of the Fourteenth Amendment.” Far West Capital, Inc. v. Towne, 46 F.3d
1071, 1074 (10th Cir. 1995). Because we agree with the parties that “general”
personal jurisdiction is not applicable in this case, we turn directly to the issue of
“specific” personal jurisdiction. “[T]he evaluation of specific jurisdiction in Utah
mandates a three-part inquiry: (1) the defendant’s acts or contacts must implicate
Utah under the Utah long-arm statute; (2) a ‘nexus’ must exist between the
plaintiff’s claims and the defendant’s acts or contacts; and (3) application of the
Utah long-arm statute must satisfy the requirements of federal due process.”
Soma Med. Int’l, 196 F.3d at 1297 (alteration in original) (quotations omitted);
see also Far West Capital, 46 F.3d at 1074. We address the requirements of
federal due process before turning to the other two parts of the inquiry, and we
hold that all the requirements are satisfied in this case.
A. Federal Due Process
“The Due Process Clause protects an individual’s liberty interest in not
being subject to the binding judgments of a forum with which he has established
no meaningful contacts, ties, or relations.” Burger King Corp. v. Rudzewicz, 471
U.S. 462, 471-72 (1985) (quotations omitted). Thus, a “court may exercise
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personal jurisdiction over a nonresident defendant only so long as there exist
minimum contacts between the defendant and the forum State.” World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (quotations omitted).
“The minimum contacts necessary for specific personal jurisdiction are
established if the defendant has purposefully directed his activities at residents of
the forum and the litigation results from alleged injuries that arise out of or relate
to those activities.” Soma Med. Int’l, 196 F.3d at 1298 (quotations omitted).
Thus, an analysis of whether a court’s exercise of specific personal
jurisdiction comports with the Due Process Clause is a two-step inquiry. See
Benton v. Cameco Corp., 375 F.3d 1070, 1075 (10th Cir. 2004), cert. denied, 125
S. Ct. 1826 (2005). First we consider whether “the defendant’s conduct and
connection with the forum State are such that he should reasonably anticipate
being haled into court there.” World-Wide Volkswagen, 444 U.S. at 297.
Second, “if the defendant’s actions create sufficient minimum contacts, we must
then consider whether the exercise of personal jurisdiction over the defendant
offends traditional notions of fair play and substantial justice.” OMI Holdings,
Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998)
(quotations omitted).
-7-
1. Minimum Contacts
In determining whether a defendant has established sufficient minimum
contacts with the forum state, we examine whether the defendant “purposefully
avail[ed] itself of the privilege of conducting activities within the forum State.”
Hanson v. Denckla, 357 U.S. 235, 253 (1958). A defendant’s contacts are
sufficient if “the defendant purposefully directed its activities at residents of the
forum, and . . . the plaintiff’s claim arises out of or results from actions by the
defendant himself that create a substantial connection with the forum state.” OMI,
149 F.3d at 1091 (quotations, citations, and emphasis omitted).
a. Purposeful Availment
The fact that Sporoptic made a contract with Pro Axess, which is located in
Utah, is not enough on its own to allow a Utah court to exercise jurisdiction over
Sporoptic. See Burger King, 471 U.S. at 478 (“If the question is whether an
individual’s contract with an out-of-state party alone can automatically establish
sufficient minimum contacts in the other party’s home forum . . . the answer
clearly is that it cannot.”) (emphasis in original). However, “with respect to
interstate contractual obligations, . . . parties who reach out beyond one state and
create continuing relationships and obligations with citizens of another state are
subject to regulation and sanctions in the other State for the consequences of their
activities.” Id. at 473 (quotations omitted).
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In this case, Sporoptic solicited Pro Axess’s assistance in procuring
sunglasses frames. While not conclusive, this solicitation is itself “some evidence
suggesting purposeful availment.” Far West Capital, 46 F.3d at 1076. Sporoptic
specifically sought out Pro Axess because Pro Axess had long-standing business
relationships with many manufacturers in Asia. 3 While the manufacturing and
shipping of the product were not to take place in Utah, services necessary for the
contract were to be performed in Utah. See Benton, 375 F.3d at 1077. Such
services included choosing a manufacturer for the sunglasses frames, arranging
for rough handmade models to be made into machined prototypes, arranging the
details for the manufacture of the frames at a plant in China, arranging for the
inspection of the frames in Hong Kong, invoicing and coordinating the
manufacturing process, and arranging for the shipping of the frames from Hong
Kong to France. Although the agreement between the parties was a single
contract, fulfilling the contract required a continuing relationship based on the
provision of services. By procuring such services from Pro Axess, which operates
its business in Utah, Sporoptic “purposefully avail[ed] itself of the privilege of
conducting activities within the forum State.” Hanson, 357 U.S. at 253.
3
Sporoptic argues that because the relationship between Sporoptic and Pro
Axess evolved based on personal contacts between employees at Orlux and Pro
Axess, there is no evidence that Sporoptic solicited Pro Axess. It is nonetheless
clear that Sporoptic specifically solicited the contract at issue in this case.
-9-
In addition, Sporoptic and Orlux exchanged various direct communications
with Pro Axess. Although “phone calls and letters are not necessarily sufficient
in themselves to establish minimum contacts,” Far West Capital, 46 F.3d at 1077,
such materials provide additional evidence that Sporoptic pursued a continuing
business relationship with a Utah corporation. Sporoptic rightly points out that its
direct communications with Pro Axess in Utah were minimal. However, it is not
just Sporoptic’s direct communications with Pro Axess that are relevant, but also
Orlux’s communications with Pro Axess. Companies conducting business
through their subsidiaries can qualify as transacting business in a state, provided
the parent exercises sufficient control over the subsidiary. See Curtis Publ’g Co.
v. Cassel, 302 F.2d 132, 137 (10th Cir. 1962) (“[A] wholly owned subsidiary may
be an agent and when its activities as an agent are of such a character as to
amount to doing business of the parent, the parent is subjected to the in personam
jurisdiction of the state in which the activities occurred.”); Phone Directories Co.
v. Contel Corp., 786 F. Supp. 930, 943 (D. Utah 1992) (noting that a parent
company’s exertion of “significant influence” on a subsidiary suffices for a court
to exercise personal jurisdiction over parent). 4
4
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984) (noting
that in an action where both a parent and a subsidiary are co-defendants, “[e]ach
defendant’s contacts with the forum state must be assessed individually”), is not
to the contrary. Keeton merely concludes that a court may not automatically
(continued...)
- 10 -
Sporoptic exercised considerable control over Orlux, which acted as its
agent. For example, Sporoptic’s president chose the president of Orlux.
Specifically relevant to the instant case, Sporoptic’s president approved the
concept of selling a line of low-cost sunglasses in the United States, then used
Orlux to implement the project. Orlux faxed Pro Axess a preliminary purchase
order for sunglasses frames, and Sporoptic followed up with a formal purchase
order confirming the details. Sporoptic relied on Orlux to cancel the order.
Given this relationship, we examine not only Sporoptic’s direct communications
with Pro Axess, but also Orlux’s communications with Pro Axess.
Sporoptic and Orlux exchanged numerous faxes, letters, and phone calls
with Pro Axess in Utah about the order itself and the potential for modifications
to the order. While the “quantum of contacts” between the parties is not
determinative of personal jurisdiction, Far West Capital, 46 F.3d at 1077, the
purposeful availment reflected in the content of these communications supports a
Utah court’s exercise of jurisdiction over Sporoptic. 5
4
(...continued)
exercise jurisdiction over a parent corporation if the court may exercise
jurisdiction over a subsidiary. See id.
5
Consistent with our established practice, we evaluate not just the quantity
of Sporoptic’s contacts with Utah, but also the quality of those contacts. See
OMI, 149 F.3d at 1092. The contacts that occurred while Pro Axess and
Sporoptic were building a business relationship, maintaining that relationship, and
attempting to salvage that relationship are more indicative of purposeful
(continued...)
- 11 -
b. Arising Out Of
It is clear that there is a nexus between Sporoptic’s contacts with Utah and
Pro Axess’s injuries, such that Pro Axess’s injuries “arise out of or relate to
[Sporoptic’s] activities.” Burger King, 471 U.S. at 472 (quotations omitted); see
also OMI, 149 F.3d at 1095. Pro Axess’s breach of contract claims arose from
Sporoptic’s solicitation of Pro Axess, development of a business agreement with
Pro Axess, and subsequent communications with Pro Axess. Those same
interactions also constitute Sporoptic’s contacts with Utah. Thus, Pro Axess’s
claims arise out of Sporoptic’s contacts with Utah.
Sporoptic argues that Pro Axess’s presence in Utah is a coincidence that is
inadequate to allow a Utah court to exercise specific personal jurisdiction over
Sporoptic. However, this is not a case where “[t]he quality and nature” of
Sporoptic’s contact with Utah was “so random, fortuitous, or attenuated that it
cannot fairly be said that [Sporoptic] should reasonably anticipate being haled
into court” in Utah. Burger King, 471 U.S. at 486 (quotations and footnote
5
(...continued)
availment than are the contacts that occurred as the parties traded recriminations
in advance of this lawsuit. Thus, we give less weight to the latter type of contacts
in this case—most notably Sporoptic’s fax to Pro Axess in response to Pro
Axess’s threat of litigation if payment were not received. Affording less weight
to this latter type of contacts ensures that parties will not avoid attempting to
resolve their disputes informally, for fear that the flow of communications as part
of such efforts will subject them to jurisdiction in a foreign forum where they
could not otherwise be haled into court.
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omitted). After all, this is not a case in which the defendant’s only contacts with
the forum resulted from the “unilateral activity of another party or a third person.”
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417 (1984).
Thus, Sporoptic’s reliance on Soma Med. Int’l and Lakeside Bridge & Steel Co.
v. Mountain State Constr. Co., 597 F.2d 596 (7th Cir. 1979), is misplaced. See
Soma Med. Int’l, 196 F.3d at 1299 (involving a plaintiff going outside its home
state to initiate contact with the defendant); Lakeside Bridge & Steel Co., 597
F.2d at 598, 603 (same). Rather, Sporoptic voluntarily sought out and conducted
business with Pro Axess, with whom Sporoptic had contracted before and whom
Sporoptic therefore knew to be located in Utah. 6
Although this is a somewhat close case, we believe that Sporoptic
“purposefully directed [its] activities at residents of the forum, and the litigation
result[ed] from alleged injuries that ar[o]se out of or relate to those activities.”
Burger King, 471 U.S. at 472 (quotations and citation omitted). As a result,
Sporoptic’s “conduct and connection with the forum State [were] such that [it]
should reasonably anticipate being haled into court there.” World-Wide
6
Sporoptic’s effort to pin down the place of contract formation is
unpersuasive. After all, it is the full scope of a defendant’s behavior, not simply
the place of contract formation, that determines whether a court may exercise
specific personal jurisdiction over a non-resident defendant in a breach of
contract action. See Burger King, 471 U.S. at 478-79.
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Volkswagen, 444 U.S. at 297. Thus, we hold that Sporoptic had sufficient
minimum contacts with Utah to support a Utah court’s exercise of personal
jurisdiction over Sporoptic.
2. Traditional Notions of Fair Play and Substantial Justice
In analyzing whether a court’s exercise of personal jurisdiction offends
“traditional notions of fair play and substantial justice,” Asahi Metal Indus. Co. v.
Superior Court, 480 U.S. 102, 113 (1987), we determine “whether a district
court’s exercise of personal jurisdiction over a defendant with minimum contacts
is reasonable in light of the circumstances surrounding the case.” OMI, 149 F.3d
at 1091 (quotations omitted). We do so by considering:
(1) the burden on the defendant, (2) the forum state’s interest in
resolving the dispute, (3) the plaintiff’s interest in receiving
convenient and effective relief, (4) the interstate judicial system’s
interest in obtaining the most efficient resolution of controversies,
and (5) the shared interest of the several states in furthering
fundamental social policies.
Id. at 1095. The analyses of minimum contacts and reasonableness are
complementary, such that
the reasonableness prong of the due process inquiry evokes a sliding
scale: the weaker the plaintiff’s showing on [minimum contacts], the
less a defendant need show in terms of unreasonableness to defeat
jurisdiction. The reverse is equally true: an especially strong
showing of reasonableness may serve to fortify a borderline showing
of [minimum contacts].
Id. at 1092 (alterations in original) (quotations omitted).
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In this case, we have determined that Sporoptic “purposefully . . . directed
[its] activities” at Utah. Burger King, 471 U.S. at 477. In such a case, “where a
defendant . . . seeks to defeat jurisdiction, [it] must present a compelling case that
the presence of some other considerations would render jurisdiction
unreasonable.” Id. Sporoptic cannot meet this exacting standard.
a. Burden on Defendant of Litigating in the Forum
“[T]he burden on the defendant of litigating the case in a foreign forum is
of primary concern in determining the reasonableness of personal jurisdiction. . . .
When the defendant is from another country, this concern is heightened and great
care and reserve should be exercised before personal jurisdiction is exercised over
the defendant.” OMI, 149 F.3d at 1096 (quotations omitted). However, “modern
transportation and communication have made it much less burdensome for a party
sued to defend himself in a State where he engages in economic activity.” Burger
King, 471 U.S. at 474 (quoting McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223
(1957)).
In this case, Sporoptic’s headquarters in France is a substantial distance
from Utah, but Sporoptic’s president has demonstrated his ability to journey to the
United States for the company’s business dealings by meeting with Pro Axess in
New York. Moreover, Sporoptic owns a subsidiary in California. Thus,
Sporoptic’s employees and its agents travel to and operate in the United States to
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conduct economic activity, minimizing concerns about the burden that litigating
in Utah might place on them. Moreover, any fears that Sporoptic might not be
able to obtain a fair trial because of language issues are misplaced, for the record
reveals that Sporoptic’s employees and agents regularly and adequately conduct
business in English. Accordingly, forcing Sporoptic to litigate this dispute in
Utah is not “gravely difficult and inconvenient.” Burger King, 471 U.S. at 478.
b. Forum State’s Interest in Adjudicating the Dispute
“States have an important interest in providing a forum in which their
residents can seek redress for injuries caused by out-of-state actors.” OMI, 149
F.3d at 1096. “The state’s interest is also implicated where resolution of the
dispute requires a general application of the forum state's laws.” Id. In this case,
this factor favors Utah’s exercise of jurisdiction over Sporoptic. Pro Axess is a
Utah corporation with its principal place of business in Utah, and the state has an
interest in providing it with a forum for its suit against Sporoptic. 7
c. Plaintiff’s Interest in Convenient and Effective
Relief
This factor
hinges on whether the Plaintiff may receive convenient and effective
relief in another forum. This factor may weigh heavily in cases where
Utah’s interest in providing a forum for its citizens distinguishes this case
7
from OMI and Asahi, where none of the parties were residents of the forum state.
See Asahi, 480 U.S. at 114 (plurality opinion); OMI, 149 F.3d at 1096.
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a Plaintiff’s chances of recovery will be greatly diminished by
forcing him to litigate in another forum because of that forum’s laws
or because the burden may be so overwhelming as to practically
foreclose pursuit of the lawsuit.
Id. at 1097. Because common law governs this suit, litigating the case in France, a
civil law country, would be difficult. Moreover, Pro Axess’s management would
face the hardship of traveling to France and conducting litigation in a language
with which it is not readily apparent that they are familiar. We find that Pro
Axess would not be able to receive convenient and effective relief by bringing
suit in France, thus this factor weighs in favor of Utah’s exercise of jurisdiction.
d. Interstate Judicial System’s Interest in Obtaining
Efficient Resolution
This factor asks “whether the forum state is the most efficient place to
litigate the dispute.” Id. “Key [sic] to this inquiry are the location of witnesses,
where the wrong underlying the lawsuit occurred, what forum’s substantive law
governs the case, and whether jurisdiction is necessary to prevent piecemeal
litigation.” Id. (citations omitted). Based on the nature of Pro Axess’s claims
against Sporoptic, and the fact that Sporoptic operated through Orlux, many of the
witnesses in the dispute are based in the United States. Likewise, common law,
not civil law, governed the dispute. Therefore, we find that litigating the dispute
in Utah would be more efficient than doing so in France.
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e. States’ Interest in Furthering Fundamental
Substantive Social Policies
The fifth factor of the reasonableness inquiry “focuses on whether the
exercise of personal jurisdiction by [the forum] affects the substantive social
policy interests of other states or foreign nations.” Id. “[G]reat care and reserve
should be exercised when extending our notions of personal jurisdiction into the
international field.” Id. at 1097-98. Therefore, we must look closely at the extent
to which an exercise of personal jurisdiction by Utah over Sporoptic interferes
with France’s sovereignty. Relevant facts include “whether one of the parties is a
citizen of the foreign nation, whether the foreign nation’s law governs the
dispute, and whether the foreign nation’s citizen chose to conduct business with a
forum resident.” Id. at 1098 (citations omitted). Sporoptic is a French company.
However, this dispute is not governed by French law, and Sporoptic chose to
conduct business with Pro Axess, a resident of Utah. Therefore, we find that an
exercise of personal jurisdiction would not affect France’s policy interests.
In sum, these five factors do not weigh in Sporoptic’s favor. Sporoptic
certainly cannot establish a “compelling case” that the exercise of jurisdiction by
a Utah court would be unreasonable. Burger King, 471 U.S. at 477. Thus, we
hold that Utah’s exercise of personal jurisdiction over Sporoptic would not offend
- 18 -
traditional notions of fair play and substantial justice. 8 Therefore, the district
court’s exercise of personal jurisdiction over Sporoptic satisfies both prongs of
the federal due process analysis.
B. Nexus
As noted in Soma Med. Int’l, Utah law on specific personal jurisdiction
mandates that a nexus exist between Pro Axess’s claims and Sporoptic’s contacts
with Utah. 196 F.3d at 1297. This is analogous to part of the minimum contacts
due process analysis above. See OMI, 149 F.3d at 1095. Because we found that
Sporoptic’s contacts with Utah fulfilled the requirements of the minimum contacts
due process analysis, we also conclude that the required nexus exists under state
law.
C. Utah Long-Arm Statute
The Utah Supreme Court has stated that “any set of circumstances that
satisfies due process will also satisfy the long-arm statute.” SII MegaDiamond,
Inc. v. Am. Superabrasives Corp., 969 P.2d 430, 433 (Utah 1998). This is
because the Utah legislature has declared that the long-arm statute must be
8
Because this suit is not governed by French law, many of the witnesses in
this case are located in the United States, and proceedings in the alternative forum
in France would not be conducted in English, this case is distinguishable from
Benton, 375 F.3d at 1079-80 (ruling that a Colorado court could not exercise
personal jurisdiction over Canadian defendant where the suit was governed by
Canadian law, many witnesses were located in Canada, and proceedings in
Canada would be conducted in English-speaking province).
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interpreted broadly “so as to assert jurisdiction over nonresident defendants to the
fullest extent permitted by the due process clause of the Fourteenth Amendment
to the United States Constitution.” Utah Code Ann. § 78-27-22. Thus, because
the court’s exercise of jurisdiction over Sporoptic in this case satisfies due
process, that exercise also satisfies the Utah long-arm statute.
Accordingly, we conclude that both the federal and state inquiries for
whether assertion of specific personal jurisdiction is proper are satisfied on the
facts of this case, and therefore that the district court did not err in exercising
jurisdiction over Sporoptic. 9
II. Prejudgment Interest
We examine the district court’s decision not to award prejudgment interest
to Pro Axess for an abuse of discretion, reviewing de novo the legal analysis on
which that decision is based. See Atlantic Richfield Co. v. Farm Credit Bank of
Wichita, 226 F.3d 1138, 1156 (10th Cir. 2000). We apply Utah law in conducting
this analysis. See Webco Indus., Inc. v. Thermatool Corp., 278 F.3d 1120, 1134
(10th Cir. 2002) (“Prejudgment interest in a diversity action is . . . a substantive
matter governed by state law.”). We hold that the district court did not err in
9
Contrary to Sporoptic’s assertions, the fact that Pro Axess threatened to
bring litigation in France is irrelevant to whether personal jurisdiction exists in
Utah. Jurisdiction involves a court’s ability to preside over a lawsuit—not a
party’s public posturing early on in a dispute.
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denying Pro Axess’s post-trial motion for prejudgment interest because Pro
Axess’s damages were not calculable with the mathematical certainty necessary to
support such an award and were not established as of a particular date.
A. Calculability of Damages
Under Utah law, “[a] prejudgment interest award is proper when the
damage is complete . . . [and] the loss can be measured by facts and figures.”
Lefavi v. Bertoch, 994 P.2d 817, 823 (Utah Ct. App. 2000) (quotations omitted).
“[A] court may only award prejudgment interest if damages are calculable within
a mathematical certainty.” Id.
In this case, Pro Axess itself was not able to calculate its damages
consistently during the period before trial, making clear that such damages were
not “calculable within a mathematical certainty.” In its January 1997 complaint,
Pro Axess claimed damages of $342,000 plus prejudgment interest. 10 In its Rule
26(a) disclosures two years later, Pro Axess stated that its damages had not been
determined. In a July 1999 response to an interrogatory, Pro Axess claimed
10
This figure seems to have included $60,300 for parts already purchased
plus other unspecified damages.
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damages of $239,950 plus prejudgment interest. 11 In an October 2000 affidavit
and in the May 2001 Pretrial Order, Pro Axess claimed damages of $309,603. 12
The evolution of the amount of Pro Axess’s damages claim during trial also
underscores the fact that those damages were not “calculable within a
mathematical certainty.” Pro Axess decreased its claim for unrealized gross
profits from $119,700 to $98,700 because it had overstated the lost revenue on
which those profits were based by $60,000. Pro Axess also decreased its claim
for the cost of parts already purchased from $60,390 to $57,564 because it had
mistakenly included the cost of parts from another order. Thus, at trial Pro
Axess’s total claim for damages decreased by $13,826, plus the associated
difference in interest.
Further, Pro Axess’s damages for unrealized gross profits simply were not
“calculable within a mathematical certainty” based on the evidence that Pro Axess
submitted to the district court. Pro Axess submitted virtually no evidence in
support of its claim of a 35% gross profit margin. Especially given Utah courts’
11
This figure included $60,390 for parts already purchased, $17,950 in
interest on those parts (at 10% for 36 months), $119,700 in unrealized gross
profits (at a 35% profit margin), $35,910 in interest on unrealized profits (at 10%
for 36 months), $5,000 in travel expenses, and $500-$1,000 for out of pocket
expenses.
12
This figure included $60,390 for parts already purchased, $40,076 in
interest on those parts (at 10% for 62 months, 10 days), $119,700 in unrealized
gross profits (at a 35% profit margin), $79,437 in interest on unrealized profits (at
10% for 62 months, 10 days), and $10,000 in travel expenses and other costs.
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reluctance to award prejudgment interest for unrealized profits, see Canyon
Country Store v. Bracey, 781 P.2d 414, 422 (Utah 1989) (“While the basis of the
‘formula’ used to determine Canyon Country’s lost profits may have been
sufficient for the jury to render a verdict in favor of Canyon Country, it is too
speculative to allow for the addition of prejudgment interest.”), Pro Axess’s
evidence of its gross profit margin is clearly inadequate to support the award of
prejudgment interest.
Similarly, Pro Axess failed to provide any written support for its claimed
travel costs and other expenses. One of Pro Axess’s employees noted that in
calculating these expenses “we didn’t get down to specifics” but instead “looked
at the trips that we had taken, some of the other out-of-pocket costs, and came up
with a round figure.” Such an effort clearly does not establish damages
“calculable within a mathematical certainty.”
Pro Axess argues that the variance over time in the amount of damages that
it sought came as a result of a mistake in calculation, and that such a mistake
should not defeat its claim for prejudgment interest. In support of this contention,
Pro Axess relies on Lefavi’s finding that a defendant’s failure to keep proper
records should not bar an award of prejudgment interest. See Lefavi, 994 P.2d at
823. However, in this case it is the inability of Plaintiff—not Defendants—to
keep proper records that impedes Plaintiff’s attempt to establish damages
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“calculable within a mathematical certainty.” It is well-established under Utah
law that a plaintiff’s inability to calculate its damages accurately may bar the
award of prejudgment interest. See Anesthesiologists Assoc., 852 P.2d at 1042
n.11 (“Although arriving at this figure should only have been a matter of adding
up the number of late-night visits made by nurse anesthetists over the contract
period, it would be unfair to charge prejudgment interest against the [defendant]
when [the plaintiff], due to inadequate records or otherwise, apparently could not
arrive at a mathematically precise figure at the time it filed its Amended
Complaint.”). Thus, Pro Axess’s reliance on Lefavi is misplaced.
Finally, the fact that a jury has already awarded damages in this case does
not mean that damages were “calculable within a mathematical certainty.”
Because it is “axiomatic that all claims can be reduced eventually to monetary
value,” “[c]ommon sense” precludes the conclusion that merely because damages
have been calculated by a jury, they are “calculable within a mathematical
certainty.” Canyon Country Store, 781 P.2d at 422.
Thus, Pro Axess is not entitled to prejudgment interest because its damages
were not “calculable within a mathematical certainty.”
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B. Date from which Interest Would Run
For a prejudgment interest award to be proper under Utah law, not only
must damages be “calculable within a mathematical certainty,” but also “the
amount of loss [must be] fixed as of a particular time.” Lefavi, 994 P.2d at 823;
see also Cornia v. Wilcox, 898 P.2d 1379, 1387 (Utah 1995) (“Where the damage
is complete and the amount of the loss is [measurably] fixed as of a particular
time . . . interest should be allowed from that time . . . .”) (emphasis added,
quotations omitted).
In this case, because Pro Axess never established the date on which it
suffered damages—the date from which prejudgment interest should run—an
award of prejudgment interest is not proper. In the above-mentioned October
2000 affidavit and May 2001 Pretrial Order, Pro Axess asserted that prejudgment
interest should be calculated from July 31, 1995, which was the initial shipping
date for the sunglasses frames. At trial, Pro Axess asserted that the July 31
shipping date had been canceled by mutual agreement and that as late as spring
1996 there was still no agreement as to the shipping date. Thus, Pro Axess’s
position at trial implies that it did not sustain damages on July 31, 1995. Because
there was no special verdict form requesting that the jury set a date for the
beginning of the running of prejudgment interest, the jury did not make a finding
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as to that issue. 13 Pro Axess’s post-trial motion for prejudgment interest asserted
that June 1, 1995 was the date from which prejudgment interest should run.
Therefore, it is unclear whether interest should be calculated from June 1, 1995,
as Pro Axess now maintains; July 31, 1995, as Pro Axess earlier maintained; or
some other date entirely, as is implied by Pro Axess’s earlier assertion that the
order had been delayed from July 31, 1995 by mutual agreement of the parties.
This uncertainty renders the award of prejudgment interest improper under Utah
law.
For all these reasons, the district court did not err in declining to award
prejudgment interest to Pro Axess.
CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s judgment and
the district court’s denial of Pro Axess’s request for prejudgment interest.
Pro Axess did not object to the lack of jury instructions or a special
13
verdict form on this issue.
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Pro Axess, Inc. v. Orlux Distribution, Inc.
Court: Court of Appeals for the Tenth Circuit
Date filed: 2005-11-08
Citations: 428 F.3d 1270
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