F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
MAR 9 2000
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
INTERCON, INC., an Oklahoma
corporation,
Plaintiff-Appellant,
v. No. 98-6428
BELL ATLANTIC INTERNET
SOLUTIONS, INC., a Delaware
corporation,
Defendant-Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
(D.C. No. 97-CV-1620-M)
Submitted on the briefs:
Emmanuel E. Edem, Thomas A. Wallace of Norman, Edem, McNaughton &
Wallace, Oklahoma City, Oklahoma, for Plaintiff-Appellant.
James R. Webb of McAfee & Taft, P.C., Oklahoma City, Oklahoma, and Daniel
F. Katz, Robert A. Van Kirk, John C. Shipley, Jr. of Williams & Connolly,
Washington, D.C., for Defendant-Appellee.
Before BALDOCK , HENRY , and MURPHY , Circuit Judges.
MURPHY , Circuit Judge.
Plaintiff-appellant Intercon, Inc., appeals the district court’s order
dismissing its action against defendant Bell Atlantic Internet Solutions, Inc.,
for lack of personal jurisdiction. Because plaintiff made a prima facie showing
that defendant purposefully directed its conduct at the forum state, and that this
conduct caused plaintiff’s harm, we reverse the district court’s decision and
remand the case for further proceedings. 1
Plaintiff, an Oklahoma corporation, operates an Internet access service
which provides customers with access to the World Wide Web and carries their
electronic mail (e-mail) messages back and forth. For Internet routing purposes,
plaintiff’s domain name is “icon.net.”
In July 1996, defendant, a Delaware corporation doing business in the
northeastern and mid-Atlantic United States, began offering a dial-up Internet
service. Because of certain provisions of the Telecommunications Act of 1996,
defendant was not permitted to carry telephone transmissions across regional
boundaries, but was required instead to use a global service provider to transmit
the e-mail messages and Internet traffic. Defendant offered its subscribers
1
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
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a choice between several global service providers, including a New Jersey
company called ICon CMT, whose domain name was “iconnet.net.” Beginning
in July 1996, defendant mistakenly routed its customer’s e-mail messages to the
wrong domain name, thus using plaintiff’s mail server instead of ICon CMT’s
server.
In late October and early November, plaintiff’s mail server experienced
a severe slow-down in processing ability due to the thousands of mail messages
being routed through it by defendant. Plaintiff’s support personnel also began
receiving e-mail and telephone inquiries from defendant’s customers regarding
the speed of their e-mail delivery. After plaintiff’s president, Wes Chew,
contacted defendant on several occasions, defendant began taking steps to correct
the problem. Defendant finally terminated its use of plaintiff’s facilities on
February 20, 1997, by completely blocking customer access to the mail server.
Plaintiff brought this action against defendant in the United States District
Court for the Western District of Oklahoma, seeking compensation for
defendant’s unauthorized use of the mail server and the damages caused thereby.
To establish the existence of personal jurisdiction over defendant, plaintiff’s
president stated in an affidavit that he began contacting defendant in late October
about the unauthorized use of plaintiff’s mail server; that he was advised that
defendant knew it was routing traffic to plaintiff’s server and that e-mail traffic
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from approximately 12,000 of defendant’s subscribers was involved; that on one
occasion he identified himself as one of defendant’s subscribers and was given
plaintiff’s phone number for technical support; that even after contacting
defendant about the unauthorized use he was not given a time frame within which
defendant intended to correct the problem; that it was only after he engaged an
attorney in late November that defendant agreed to stop giving the incorrect
address to its customers by December 31, 1996, and to revise its Internet access
program to prevent its subscribers from being routed through plaintiff’s server
by February 20, 1997; and that as a programmer familiar with Internet access and
e-mail services, it was his opinion that defendant could have blocked customer
access to the Oklahoma mail server immediately upon discovering the problem.
See Appellant’s App. at 74-78. In response, defendant submitted an affidavit
stating that it conducted no business in Oklahoma; that it was not informed of
the problem until “late December”; that it took immediate steps to halt the flow of
e-mail traffic; and that it finally interrupted its customers’ service on February 20,
1997. See id. at 80-84. The district court granted defendant’s motion to dismiss,
finding defendant’s contacts with the forum state of Oklahoma were not
purposefully established. See id. at 72-73. This appeal followed.
We review the district court’s jurisdictional ruling de novo and resolve all
factual disputes in favor of plaintiff. See OMI Holdings, Inc. v. Royal Ins. Co.,
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149 F.3d 1086, 1091 (10th Cir. 1998). Although plaintiff bears the burden of
establishing personal jurisdiction over defendant, see id., in the preliminary stages
of litigation this burden is “light.” Wenz v. Memery Crystal, 55 F.3d 1503, 1505
(10th Cir. 1995).
Where, as in the present case, there has been no evidentiary hearing,
and the motion to dismiss for lack of jurisdiction is decided on the
basis of affidavits and other written material, the plaintiff need only
make a prima facie showing that jurisdiction exists. The allegations
in the complaint must be taken as true to the extent they are
uncontroverted by the defendant’s affidavits. If the parties present
conflicting affidavits, all factual disputes must be resolved in the
plaintiff’s favor, and the plaintiff’s prima facie showing is sufficient
notwithstanding the contrary presentation by the moving party.
However, only the well pled facts of plaintiff's complaint, as
distinguished from mere conclusory allegations, must be accepted as
true.
Id. (citations and quotations omitted).
To obtain personal jurisdiction over a nonresident defendant in a diversity
action, a plaintiff must show both that jurisdiction is proper under the laws of the
forum state and that the exercise of jurisdiction would not offend due process.
See Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1074 (10th Cir. 1995).
Because Oklahoma’s long-arm statute permits the exercise of any jurisdiction that
is consistent with the United States Constitution, the personal jurisdiction inquiry
under Oklahoma law collapses into the single due process inquiry. See Rambo v.
American S. Ins. Co., 839 F.2d 1415, 1416 (10th Cir. 1988).
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The Due Process Clause permits the exercise of personal jurisdiction over
a nonresident defendant “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) (quotation omitted). The “minimum contacts” standard may
be met in two ways. First, a court may, consistent with due process, assert
specific jurisdiction over a nonresident defendant “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.”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quotations and
citations omitted). When a plaintiff’s cause of action does not arise directly from
a defendant’s forum-related activities, the court may nonetheless maintain general
personal jurisdiction over the defendant based on the defendant’s business
contacts with the forum state. See Helicopteros Nacionales de Colombia v. Hall,
466 U.S. 408, 414-16 & n.9 (1984).
Even if defendant’s actions created sufficient minimum contacts, we must
still consider whether the exercise of personal jurisdiction over defendant would
offend traditional notions of “fair play and substantial justice.” Burger King
Corp., 471 U.S. at 476 (quotation omitted). This inquiry requires a determination
of whether the district court’s exercise of personal jurisdiction over defendant is
reasonable in light of the circumstances surrounding the case. See id. at 477-78.
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Here, accepting plaintiff’s evidence as true, we conclude that plaintiff has
shown that defendant purposefully directed its conduct toward Oklahoma after the
end of October 1996. At that point, defendant had notice that it was routing its
customer’s e-mail through the Oklahoma mail server and that the unauthorized
traffic was causing problems for the Oklahoma-based company. It is possible that
defendant knew this information even earlier, as it was already providing
plaintiff’s phone number to its customers for technical support before plaintiff
advised defendant of the problem. Defendant nonetheless continued to provide
plaintiff’s address to its new subscribers for a full two months, until
December 31, 1996, and permitted thousands of its old customers to access the
Oklahoma server for an additional seven weeks, despite having the technological
ability to prevent such access immediately upon discovering the problem.
Although defendant may have had a legitimate business reason for not terminating
its use of the Oklahoma mail server immediately–concerns over interrupting its
customers’ service–this does not negate the fact that defendant purposefully
availed itself of the Oklahoma server for almost four months after being notified
of the erroneous address.
In analogous situations, courts have held the use of a computer or network
service located in a particular state created sufficient contacts to establish
personal jurisdiction. See, e.g., CompuServe, Inc. v. Patterson, 89 F.3d 1257,
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1263-65 (6th Cir. 1996) (finding personal jurisdiction existed over defendant
in Ohio where defendant entered into contract to distribute software through
plaintiff’s Ohio Internet server and defendant repeatedly sent his software files
to the Ohio server via e-mail); Zippo Mfg. Co. v. Zippo Dot Com, Inc.,
952 F. Supp. 1119, 1124-27 (W.D. Penn. 1997) (distinguishing advertising cases
from those in which defendant enters into contracts with forum state residents
“involv[ing] the knowing and repeated transmission of computer files over the
Internet,” and finding jurisdiction in infringement suit against news service that
consciously transmitted electronic messages into the state); Plus System, Inc. v.
New England Network, Inc., 804 F. Supp. 111, 118-19 (D. Colo. 1992) (finding
jurisdiction based in significant part on use of forum state’s computers to perform
ATM processing services which benefitted defendant by providing its customers
with nationwide ATM service); see also Panavision Int’l, L.P. v. Toeppen, 141
F.3d 1316, 1322 (9th Cir. 1998) (finding purposeful availment when Illinois
defendant established a website using California plaintiff’s trademark as his
domain name and then sought compensation to give up the name; defendant’s
conduct was expressly aimed at the forum state and caused its effects there).
Defendant argues that because it never intended to transmit traffic through
Oklahoma, its inadvertent contacts with Oklahoma were merely “fortuitous,” and
therefore insufficient to establish personal jurisdiction, citing World-Wide
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Volkswagen, 444 U.S. at 295 (characterizing car manufacturer’s ties with
Oklahoma as “fortuitous” because they resulted entirely out the fact that the
plaintiffs had driven their car into that state). While this may be an accurate
description of defendant’s initial contacts with Oklahoma, after the end of
October 1996, its continued transmission of e-mail through the Oklahoma mail
server was knowing and intentional. See, e.g., Zippo Mfg., 952 F. Supp. at 1126
(holding service provider’s contacts were not “fortuitous,” because it “repeatedly
and consciously chose to process [customers’] applications and to assign them
passwords,” it “knew that the result of these contracts would be the transmission
of electronic messages into Pennsylvania,” and “[t]he transmission of these files
was entirely within its control”).
We also hold that defendant’s activities and their consequences have
a substantial enough connection with Oklahoma to make the exercise of
jurisdiction reasonable. See World-Wide Volkswagen, 444 U.S. at 292. After
receiving notice of the routing error, defendant knew its conduct over the next
four months was causing injury in Oklahoma, and it should reasonably have
expected to be sued there. See Calder v. Jones, 465 U.S. 783, 789-91 (1984)
(holding California jurisdiction over defendants was proper because their
intentional, and allegedly tortious, conduct in Florida was calculated to cause
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injury to plaintiff in California, and they must have “reasonably anticipate[d]
being haled into court there”).
We consider the following factors in deciding whether the exercise of
jurisdiction is reasonable: (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 substantive social policies. See Burger
King Corp., 471 U.S. at 477. We conclude these factors weigh in favor of
exercising jurisdiction over defendant.
First, although there will certainly be some burden on defendant, it is
a large interstate company accustomed to conducting business and litigation in
multiple states. Second, Oklahoma has a “manifest interest” in providing a
forum in which its residents can seek redress for intentional injuries caused by
out-of-state actors. See Burger King, 471 U.S. at 473. Third, plaintiff is a small
local company with limited resources, whose involvement in the underlying
events has been totally involuntary. We have held that this third factor weighs
heavily in favor of a plaintiff when the “[p]laintiff’s chances of recovery will be
greatly diminished by forcing [it] to litigate in a another forum . . . because the
burden may be so overwhelming as to practically foreclose pursuit of the
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lawsuit.” OMI Holdings, 149 F.3d at 1097. Plaintiff’s evidence indicates that
it may well suffer this type of prejudice if forced to litigate outside the state. See
Appellant’s App. at 78. Fourth, Oklahoma seems to be the most efficient place
to litigate the dispute. Although witnesses are located both at defendant’s
principal place of business in Virginia and at plaintiff’s business in Oklahoma,
the wrong underlying the lawsuit occurred in Oklahoma. The fifth factor does not
appear to apply in this case. Upon balancing these factors, we conclude the
exercise of personal jurisdiction over defendant is reasonable.
The judgment of the United States District Court for the Western District of
Oklahoma is REVERSED.
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