F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
June 12, 2007
UNITED STATES COURT OF APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
TH AGRICULTURE & NUTRITION, LLC,
Plaintiff - Appellant,
v. No. 06-3105
ACE EUROPEAN GROUP LIMITED; AGF
INSURANCE, LTD.; AXA GLOBAL
RISKS (UK), LTD.; AXA SCHADE N.V.;
CGU INTERNATIONAL INSURANCE
PLC; CHUBB INSURANCE COMPANY
OF EUROPE S.A.; FORTIS CORPORATE
INSURANCE N.V.; GENERALI
SCHADEVERZEKERING
MAATSCHAPPIJ, N.V.;
GERLING-KONZERN ALLGEMEINE
VERSICHERUNGS-AG; HDI
VEZEKERINGEN N.V.; ROYAL & SUN
ALLIANCE INSURANCE (GLOBAL)
LTD.; WINTERTHUR
SCHADEVERZEKERING
MAATSCHAPPIJ N.V.; XL INSURANCE
COMPANY LIMITED,
Defendants - Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
(D. Ct. No. 05-CV-2423-JWL)
Kenneth H. Frenchman, Dickstein Shapiro Morin & Oshinsky LLP, New York, New
York (Robin L. Cohen, Dorothy A. Thomas, and Andrew N. Bourne, Dickstein Shapiro
Morin & Oshinsky LLP, New York, New York, and Michael J. Abrams, Lathrop &
Gage, LLC, Kansas City, Missouri, with him on the briefs), appearing for Plaintiff-
Appellant.
Thomas W. Brunner, Wiley Rein & Fielding LLP, Washington, DC (Richard A. Ifft and
Karalee C. Morell, Wiley Rein & Fielding LLP, Washington, DC; Dan Biles, Gates Biles
Shields & Ryan P.A., Overland Park, Kansas; Norman C. Kleinberg, Derek J.T. Adler,
William J. Beausoleil, Hughes Hubbard & Reed, New York, New York, with him on the
brief), appearing for Defendants-Appellees.
Before, TACHA, Chief Circuit Judge, BALDOCK, and LUCERO, Circuit Judges.
TACHA, Circuit Judge.
Petitioner-Appellant TH Agriculture & Nutrition, LLC (“THAN”) filed suit in the
District Court against Defendant-Appellee insurance companies (“Insurers”), seeking
damages and declaratory relief for the Insurers’ alleged breach of insurance policies
under which THAN is insured. The District Court granted the Insurers’ motions to
dismiss based on lack of personal jurisdiction over the Insurers and improper venue.
THAN appeals. We exercise jurisdiction pursuant to 28 U.S.C. § 1291. Because we
conclude that the District Court lacks personal jurisdiction over the Insurers, we AFFIRM
the District Court’s ruling and DISMISS THAN’s appeal.
I. BACKGROUND
THAN is a limited liability company organized under the laws of Delaware with
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its principal place of business in Lenexa, Kansas.1 THAN is a subsidiary of Philips
Electronics North America Corporation (“PENAC”), which in turn is a subsidiary of
Koninklijke Philips Electronics N.V. (“Philips”), a Dutch corporation. The Defendants
are thirteen European insurance companies,2 including five with their place of
incorporation and principal place of business in the Netherlands, six with their place of
incorporation and principal place of business in the United Kingdom, one with its place
of incorporation and principal place of business in Germany, and one with its place of
incorporation in Belgium and principal place of business in the Netherlands. The
Insurers subscribed to primary and excess general liability insurance policies known as
the World-Wide Liability Insurance Programme (the “Programme” or “policies”). A
Dutch insurance broker, AON Nederland, placed the insurance policies under the
Programme with individual insurers, and the Defendant-Insurers subsequently issued the
policies to Philips in the Netherlands. The Programme provides worldwide insurance
coverage to Philips, the named insured, and its unnamed direct and indirect subsidiaries
1
Defendants dispute that THAN’s principal place of business is in Kansas. THAN
has submitted an affidavit from its corporate secretary that states that THAN has
maintained its corporate headquarters in Lenexa since 1994. Because we must resolve
factual disputes in favor of the plaintiff, Bell Helicopter Textron, Inc. v. Heliqwest Int’l,
385 F.3d 1291, 1295 (10th Cir. 2004), we assume that THAN’s principal place of
business is indeed in Kansas.
2
Defendants are ACE European Group Limited; AGF Insurance Ltd.; AXA Global
Risks (UK) Ltd.; AXA Schade N.V.; CGU International Insurance; Chubb Insurance
Company of Europe S.A.; Fortis Corporate Insurance N.V.; Generali Schadeverzekering
Maatschappij, N.V.; Gerling-Konzern Allegmeine Versicherungs-AG; HDI
Vezerkeringen N.V.; Royal & Sun Alliance Insurance (Global) Ltd.; Winterthur
Schadeverzekering Maatschappij N.V.; and XL Insurance Company Limited.
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for the period from December 31, 1997, through December 31, 2001. By virtue of its
status as an indirect subsidiary of Philips, THAN is insured under the Programme.
Under the Programme, the Insurers agree to indemnify the insured against product
liability claims involving “personal or bodily injury, including death.” The policies
provide:
The Insurers will, subject to the Limits of Liability, indemnify the Insured
in respect of their liability at law for compensation and claimants[’] costs
and expenses, incurred by the Insured, arising out of Injury to any person,
Damage to property, or Financial Loss and occurring during the Period of
Insurance.
In addition, the Insurers reserve the right to control any litigation involving claims
covered by the policies. Under a subsection entitled “Control of Claims,” the Programme
states: “The Insured shall not incur any expense in litigation or otherwise make any
payment, settlement, arrangement or admission of liability in respect of any claim for
which the Insurers would be liable hereunder without authority of the Insurers.” The
subsection also provides: “The Insurers shall in respect of any claim insured hereunder be
entitled to use the name of the Insured in the bringing, defending, enforcing or settling of
legal proceedings for the benefit of the Insurers and shall have absolute conduct and
control of such proceedings.”
The policies also include the following “Jurisdiction” clause that addresses the
parties’ choice of law and choice of forum:
Any dispute concerning the interpretation of the terms, conditions,
limitations and/or exclusions contained in this Policy is hereby understood
and agreed by both the Insured and the Insurers to be subject to the law of
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the Netherlands. Each party agrees to submit to the jurisdiction of any
court of competent jurisdiction within the Netherlands and to comply with
all requirements necessary to give such Court jurisdiction. All matters
arising hereunder shall be determined in accordance with the law and
practice of such Court.
From at least 1961 to 1981, THAN’s predecessor company and a Philips
subsidiary, Thompson Hayward Chemical Company of Kansas City, Missouri,
distributed raw asbestos. The majority of the company’s operations were sold to third
parties prior to 1985, since which time THAN’s primary function has been to satisfy the
company’s existing liabilities and to perform environmental remediation services in
connection with its environmental liabilities. THAN has been named as a defendant or
co-defendant in more than 14,000 claims filed in state and federal courts across the
United States alleging bodily injury and wrongful death for exposure to asbestos
allegedly distributed by Thompson Hayward. One such claim was filed in Kansas, and
THAN’s regular business activities with respect to the asbestos claims take place in
Lenexa, Kansas.
Philips first provided notice of the asbestos claims to the Programme on
November 21, 2002. Thereafter, the Insurers purportedly rescinded their policies,
claiming Philips failed during negotiations over the Programme to disclose relevant
information known to it regarding the asbestos claims. On August 10, 2005, twelve of
the thirteen Insurers (all but XL Insurance Company Limited) brought suit against
Philips, PENAC, and THAN in the Netherlands, seeking declaratory relief and
confirmation of their rescission of the Programme. On September 29, 2005, THAN
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brought the instant action in the District Court, seeking damages for breach of contract
and a declaratory judgment that the Insurers are obligated to indemnify THAN for losses
resulting from the asbestos claims and to pay the costs of defending against these claims.
II. DISCUSSION
“We review de novo [a] district court’s dismissal for lack of personal jurisdiction.”
Benton v. Cameco Corp., 375 F.3d 1070, 1074 (10th Cir. 2004) (quotation omitted).
When, as here, a district court enters a dismissal without an evidentiary hearing, the
plaintiff need only make a prima facie showing of personal jurisdiction. Id. “The
plaintiff may make this prima facie showing by demonstrating, via affidavit or other
written materials, facts that if true would support jurisdiction over the defendant.” OMI
Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir. 1998). In
deciding whether the plaintiff has made the necessary prima facie showing, we resolve
any factual disputes in the plaintiff’s favor. Benton, 375 F.3d at 1074. In order to defeat
a prima facie showing of jurisdiction, the defendant must demonstrate “that the presence
of some other considerations would render jurisdiction unreasonable.” OMI Holdings,
Inc., 149 F.3d at 1091 (quotation omitted).
“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.” Pro Axess, Inc. v. Orlux Distrib’n, Inc., 428 F.3d 1270, 1276 (10th Cir.
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2005) (quotation omitted). “Because the Kansas long-arm statute is construed liberally
so as to allow jurisdiction to the full extent permitted by due process, we proceed directly
to the constitutional issue.” OMI Holdings, Inc., 149 F.3d at 1090 (quotation omitted).
THAN does not assert that the District Court may exercise general jurisdiction over the
Insurers based on their “continuous and systematic general business contacts” with the
forum state. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 415 (1984).
We therefore ask whether the exercise of specific personal jurisdiction over the Insurers
would offend due process.
Our specific jurisdiction inquiry involves two steps. First, we ask whether the
nonresident defendant has “minimum contacts” with the forum state such “‘that he
should reasonably anticipate being haled into court there.’” OMI Holdings, Inc., 149
F.3d at 1091 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
(1980)). Second, if the defendant has sufficient minimum contacts, we ask whether the
court’s “exercise of personal jurisdiction over the defendant offends ‘traditional notions
of fair play and substantial justice.’” Id. (quoting Asahi Metal Indus. Co. v. Super. Ct. of
Cal., 480 U.S. 102, 113 (1987)). This question turns on whether the exercise of personal
jurisdiction is “reasonable” under the circumstances of a given case. Id. An “interplay
exists between the two components [of the specific jurisdiction inquiry], such that,
depending on the strength of the defendant’s contacts with the forum state, the
reasonableness component of the constitutional test may have a greater or lesser effect on
the outcome of the due process inquiry.” Id. at 1091–92 (quotation omitted). In other
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words, “the reasonableness prong of the due process inquiry evokes a sliding scale: the
weaker the plaintiff’s showing on minimum contacts, the less the defendant need show in
terms of unreasonableness to defeat jurisdiction.” Id. at 1092 (quotation and alteration
omitted).
A. Minimum Contacts
The determination of whether a nonresident defendant has minimum contacts
sufficient to support a court’s exercise of personal jurisdiction depends on the “particular
facts of each case.” Benton, 375 F.3d at 1076 (quotation omitted). A nonresident
defendant has “minimum contacts” with the forum state when he “should reasonably
anticipate being haled into court there.” World-Wide Volkswagen, 444 U.S. at 297. A
defendant may reasonably anticipate being subject to suit in the forum state “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) (internal citation omitted);
see also Hanson v. Denckla, 357 U.S. 235, 253 (1958) (“[I]t is essential in each case that
there be some act by which the defendant purposefully avails itself of the privilege of
conducting activities within the forum State.”).
1. Purposeful Availment
An individual’s contract with an out-of-state party cannot, standing alone,
establish sufficient minimum contacts with the forum state. Burger King, 471 U.S. at
478. But “parties who reach out beyond one state and create continuing relationships and
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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. To determine whether a
nonresident defendant has purposefully established minimum contacts with the forum
state by contracting with another party, we therefore examine “prior negotiations and
contemplated future consequences, along with the terms of the contract and the parties’
actual course of dealing.” Id. at 479. That is, the contract relied upon to establish
minimum contacts must have a “substantial connection” with the forum state. McGee v.
Int’l Life Ins. Co., 355 U.S. 220, 223 (1957). Moreover, this Court has indicated that the
mere presence of the insured within the forum state will not establish a substantial
connection. See Rambo v. Am. S. Ins. Co., 839 F.2d 1415, 1421 n.8 (10th Cir. 1988)
(finding due process not satisfied when the insurance contract was not mailed to forum
state, the claim was not filed from the forum state, and no premiums were mailed from
the forum state).
We must therefore decide whether the insurance policies in the present case
establish a substantial connection with Kansas. The Insurers did not solicit business in
Kansas. Philips, headquartered in the Netherlands, solicited the insurance policies
through a Dutch broker. In addition, the policies were issued to Philips in the
Netherlands, THAN paid no premiums from Kansas, Philips tendered THAN’s claims in
Europe, and all dealings relating to the policies and coverage for the asbestos claims
against THAN took place either in the Netherlands or in Switzerland. These interactions
in no way involve Kansas and are insufficient to establish minimum contacts with the
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state. Cf. McGee, 355 U.S. at 223 (finding insurance company established minimum
contacts with California because “[t]he contract was delivered in California, the
premiums were mailed from there and the insured was a resident of that State when he
died”). Thus, the Insurers’ contacts with Kansas are based solely on the issuance of
insurance policies that include a worldwide territory-of-coverage clause. As we explain
below, the issuance of an insurance policy that contains a worldwide territory-of-
coverage clause and an option to defend the insured is sufficient to establish minimum
contacts with the forum state.
In OMI Holdings, Inc. v. Royal Insurance Co. of Canada, this Court held that
nonresident insurance companies had established minimum contacts with the forum state
of Kansas based on the issuance of an insurance policy with a nationwide territory-of-
coverage clause. 149 F.3d at 1095. In that case, OMI, an Iowa corporation with its
principal place of business in Minnesota, sued its insurers, Canadian insurance
companies, in Kansas. Id. at 1089. OMI had been sued in Kansas for patent
infringement and sought to enforce insurance policies under which the defendant-insurers
agreed to defend OMI against certain claims in any United States forum. We held that
“by contracting to defend the insured in the forum state, the insurer creates some contact
with the forum state.” Id. at 1095. In concluding that the insurers had established
minimum contacts with the forum state, we discussed similar cases decided by other
circuits. Id. at 1092–95.
OMI Holdings, Inc. is similar, for example, to Rossman v. State Farm Mutual
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Automobile Insurance Co., 832 F.2d 282 (4th Cir. 1987). In Rossman, an automobile
insurance company “specifically promised to defend its policyholders from any claim or
suit arising from a loss or accident within its policy territory which included the entire
United States.” Id. at 286. The Fourth Circuit held that an automobile insurance
company “could anticipate the risk that its clients would travel in their automobiles to
different states and become involved in accidents and litigation there.” Id. Indeed, as the
court acknowledged, “[i]nsurance by its nature involves the assertion of claims, and
resort to litigation is often necessary.” Id. (quotation omitted). Moreover, the court
noted that the insurance company had “indicated its willingness” to litigate in the foreign
forum by agreeing to defend the insured against certain claims; the “expectation of being
haled into court in a foreign state [was therefore] an express feature of its policy.” Id.;
see also McGow v. McCurry, 412 F.3d 1207, 1215 (11th Cir. 2005) (citing Rossman, 832
F.2d at 286, for the proposition that an automobile insurer who issued an insurance policy
with a nationwide territory-of-coverage clause established minimum contacts with the
forum state because “not only was it foreseeable that [the insurer] might be sued in [the
forum state] . . . but the ‘expectation of being haled into court in a foreign state is an
express feature of its policy’”); Farmers Ins. Exch. v. Portage La Prairie Mut. Ins. Co.,
907 F.2d 911, 914 (9th Cir. 1990) (holding that, because the insurer contracted to
indemnify and defend the insured nationwide, “litigation requiring the presence of the
insurer [in a foreign forum] is not only foreseeable, but it was purposefully contracted for
by the insurer”); Eli Lilly & Co. v. Home Ins. Co., 794 F.2d 710, 720 (D.C. Cir. 1986)
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(holding that products liability insurer could anticipate being haled into foreign forum
because insurer knew that insured distributed its products nationwide, that insured was
likely to be sued anywhere in the nation, and that insurer would likely be impleaded over
its duty to indemnify or defend insured nationwide).
Notably, the policies at issue here differ from the policy in OMI Holdings, Inc.,
because they do not contain a clause requiring the Insurers to defend THAN in litigation.3
The policies do, however, specify that the “Insured shall not incur any expense in
litigation or otherwise make any payment, settlement, arrangement or admission of
liability in respect of any claim for which the Insurers would be liable hereunder without
authority of the Insurers,” and that the “Insurers shall in respect of any claim issued
hereunder be entitled to use the name of the Insured in the bringing, defending, enforcing
or settling of legal proceedings for the benefit of the Insurers and shall have absolute
conduct and control of such proceedings” (emphasis added). Thus, although the Insurers
are not required to defend THAN, they reserve the right to do so. The policies therefore
expressly contemplate the Insurers’ participation in litigation in foreign forums, even if
they do not establish an obligation to participate.
We recognize that we have criticized similar reasoning in other circuits’ decisions
3
In OMI Holdings, Inc., we held that, “by contracting to defend the insured in the
forum state [under a nationwide territory-of-coverage clause], the insurer creates some
contact with the forum state.” 149 F.3d at 1095. We did not, however, decide the issue
presented by the instant case: whether an insurer establishes minimum contacts with the
forum state when the insurance policy contains a worldwide territory-of-coverage clause
and an option to defend the insured.
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to the extent it relies on the foreseeability of litigation to establish an insurance company’s
minimum contacts with a forum state. OMI Holdings, Inc., 149 F.3d at 1094–95. As the
Supreme Court has directed, “‘foreseeability’ alone has never been a sufficient benchmark
for personal jurisdiction under the Due Process Clause.” World-Wide Volkswagen, 444
U.S. at 295. In World-Wide Volkswagen, for example, the mere foreseeability that an
individual could drive a car into a particular state was insufficient to create personal
jurisdiction over automobile distributors for a products liability claim. Id. at 298. The
Court also noted, however, that foreseeability is not “wholly irrelevant.” Id. at 297.
Foreseeability that an event may occur over which a defendant has no control is distinct
from foreseeability of litigation based on the defendant’s own actions. See id.
When an insurer includes a broad territory-of-coverage clause in an insurance
policy, the foreseeability of litigation in foreign states is based on the insurer’s own
actions. Unlike an automobile distributor, an insurer can control where it is subject to suit
by restricting its coverage to certain jurisdictions. Although litigation involving the
insurer’s participation may be merely foreseeable, the fact that the insurer purposefully
bargains and contracts for that participation creates contacts with the forum states within
the scope of the policy’s territory of coverage. In other words, the insurer’s “willingness
to be called into court in the foreign forum” is “an express feature of its policy.”
Rossman, 832 F.2d at 286. Unlike the product distributor in World-Wide Volkswagen, “an
insurer has the contractual ability to control the territory into which its ‘product’—the
indemnification and defense of claims—will travel.” Farmers, 907 F.2d at 914; see also
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Commonwealth of Puerto Rico v. SS Zoe Colocotroni, 628 F.2d 652, 670 (1st Cir. 1980)
(“[A]n insurer is not at the mercy of the insured owner’s unilateral choice of destination in
the same way a seller of chattels is at the mercy of the buyer.”).
We acknowledge that we have expressed concern that, when courts focus on an
insurance policy’s scope of coverage, they base jurisdiction on what a defendant-insurer
does not do, that is, its failure to exclude the forum state from coverage. See OMI
Holdings, Inc., 149 F.3d at 1094 (“Rossman is troublesome . . . [in part because] by
chastising the defendant for having the ability to exclude certain forums from coverage
and not exercising that ability, the court placed great weight on what the defendant did not
do. Such reliance, however, is clearly at odds with the Supreme Court’s mandate that
minimum contacts be based on the defendant’s affirmative actions . . . .”). We are not,
however, suggesting that insurers establish minimum contacts with a forum state by
failing to exclude it from the covered territory. Rather, insurers establish minimum
contacts with a forum state by affirmatively choosing to include the forum state in the
territory of coverage. That is, insurers quite clearly avail themselves of the privilege of
conducting business in a forum state when that state is included in an insurance policy’s
territory of coverage. While it is true that “financial benefits accruing to the defendant
from a collateral relation to the forum State will not support jurisdiction if they do not
stem from a constitutionally cognizable contact with that State,” World-Wide Volkswagen,
444 U.S. at 299 (emphasis added), insurers benefit from more than a collateral relation
when they purposefully include the forum state in a policy’s territory of coverage. An
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insurance company “offers this type of broad coverage to induce customers to buy its
policies and to pay higher premiums for them. The benefits thereby accruing to [the
insurance company] are neither fortuitous nor incidental.” Rossman, 832 F.2d at 287; see
also Ferrell v. W. Bend Mut. Ins. Co., 393 F.3d 786, 791 (8th Cir. 2005) (same); Payne v.
Motorists’ Mut. Ins. Cos., 4 F.3d 452, 456 (6th Cir. 1993) (“The fact that [an auto insurer]
chose to provide coverage for all fifty states—indeed, such coverage is almost certainly
the only kind of marketable auto insurance—constitutes purposeful availment of any
individual state’s forum.”).
Moreover, in assessing the risk involved in insuring a product, an insurer must
specifically consider the scale of a product’s distribution. Referring specifically to
products liability insurance, the D.C. Circuit explained how an insurer purposefully
directs its activities at a forum state by contemplating the risks associated with a product’s
distribution:
In determining the scope of the risk they have insured, insurers must
consider the scale on which its insured has distributed a potentially
dangerous product. The broader the distribution the greater the risk—and
presumably the higher the premium. Thus insurers cannot be said to have
failed to avail themselves, in a conscious and deliberate manner, of the
benefits of doing business in those fora in which the insured manufacturer
distributes its products.
Eli Lilly & Co., 794 F.2d at 721; see also CSR Ltd. v. Fed. Ins. Co. et al., 146 F. Supp. 2d
556, 562 (D.N.J. 2001) (holding that defendant insurance companies had “purposefully
availed themselves, in a ‘conscious and deliberate manner’ of the risks and benefits of
doing business” in the forum state because the policies included worldwide territory-of-
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coverage clauses and the insurers “undertook to insure [the plaintiff] with the knowledge
that they risked indemnifying [the plaintiff] against asbestos claims [on a worldwide
basis] and factored that risk into the price of the coverage they offered”).
In the present case, the Insurers’ minimum contacts are clearly based on the their
affirmative action. The Insurers reached out to the forum state by including it within the
policies’ worldwide territory-of-coverage clause. Indeed, the Insurers acknowledge that
they make deliberate choices regarding their policies’ scope of coverage: to support their
contention that the asbestos claims are not covered under the Programme, the Insurers
argue that they were not informed of that risk and therefore could not take it into account
when affirmatively extending coverage to Philips and its subsidiaries. By reserving the
right to defend insured entities and by agreeing to make indemnity payments within the
territory of coverage, the Insurers have purposefully availed themselves of the privileges
and benefits of conducting business in any forum state within the covered territory. These
actions are neither incidental nor accidental; the Insurers have explicitly contracted for
them and have received higher premiums in exchange for them. For these reasons, the
Insurers have established minimum contacts with the state of Kansas. As we emphasized
in OMI Holdings, Inc., however, these kinds of contacts are relatively weak. 149 F.3d at
1095 (“[S]ole reliance on the territory of coverage clause creates contacts which are
qualitatively low on the due process scale.”).
2. Injury Arising out of or Relating to Forum Activities
Although we have concluded that the Insurers created some contact with the forum
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state, we must still determine “whether a nexus exists between [the] Defendant[s’] forum-
related contacts and the Plaintiff’s cause of action.” Id. We ask “whether the plaintiff’s
claim arises out of or results from ‘actions by the defendant himself that create a
substantial connection with the forum state.’” Id. at 1091 (quoting Asahi, 480 U.S. at 109
(plurality opinion)). The Insurers’ contact with Kansas arose when they issued policies
that included Kansas within the covered territory and reserved the right to control
litigation related to covered claims. THAN is seeking coverage under the policy for
judgments entered against it and costs incurred in litigating asbestos claims, at least one of
which was filed in Kansas. Consequently, THAN’s claims arise out of the Insurers’
contact with Kansas. See id. at 1095 (concluding plaintiff’s claim arose out of defendant
insurance companies’ forum-related activity because “Defendants’ contacts arose when
the companies issued policies agreeing to defend Plaintiff from suit in Kansas[, and]
Plaintiff complain[ed] that Defendants wrongfully refused to defend them under these
policies”).
B. Traditional Notions of Fair Play and Substantial Justice
Even when a defendant has purposefully established minimum contacts with a
forum state, “minimum requirements inherent in the concept of fair play and substantial
justice may defeat the reasonableness of jurisdiction.” Burger King, 471 U.S. at 477–78
(quotation omitted). Hence, although the Insurers have sufficient minimum contacts with
Kansas, we must decide whether the assertion of personal jurisdiction over the Insurers
comports with “traditional notions of fair play and substantial justice.” Asahi, 480 U.S. at
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113 (quotation omitted). This determination requires a case-specific inquiry into the
reasonableness of the exercise of personal jurisdiction over a defendant who has minimum
contacts with the forum state. See id. We assess reasonableness by weighing five factors:
(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.
Intercon, Inc. v. Bell Atlantic Internet Solutions, Inc., 205 F.3d 1244, 1249 (10th Cir.
2000) (citing Burger King, 471 U.S. at 477).
In assessing the reasonableness of jurisdiction, we also take into account the
strength of a defendant’s minimum contacts. As we have previously stated, 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.’” OMI Holdings, Inc., 149 F.3d at 1092
(alteration in original) (quoting Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 210
(1st Cir. 1994)). Here, the Insurers’ minimum contacts— based on a worldwide territory-
of-coverage clause and a right to defend the insured—are “qualitatively low on the due
process scale.” Id. at 1095. Because their contacts are weak, the Insurers need not make a
strong showing of unreasonableness. With this in mind, we consider each reasonableness
factor below and conclude that the exercise of personal jurisdiction over the Insurers in
Kansas would be unreasonable.
1. Burden on Defendants of Litigating in the Forum
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“The unique burdens placed upon one who must defend oneself in a foreign legal
system should have significant weight in assessing the reasonableness of stretching the
long arm of personal jurisdiction over national borders.” Asahi, 480 U.S. at 114.
Consequently, “‘great care and reserve should be exercised’ before personal jurisdiction is
exercised over the defendant” in such a situation. OMI Holdings, Inc., 149 F.3d at 1096
(quoting Asahi, 480 U.S. at 115).
Because the Insurers are located in Europe, litigating a case in Kansas would
subject them to some burden. The record does not contain evidence indicating that the
Insurers conduct business in Kansas. See, e.g., Benton, 375 F.3d at 1079 (finding burden
significant when Canadian corporation had no license to conduct business in the forum
state of Colorado, had no office or property in Colorado, and had no employees in
Colorado); OMI Holdings, Inc., 149 F.3d at 1096 (finding burden significant when
Canadian corporations had no license to conduct business in Kansas, maintained no
offices in Kansas, employed no agents in Kansas, and insured no Kansas residents). In
addition to traveling to Kansas, the Insurers would “also be forced to litigate the dispute in
a foreign forum unfamiliar with the . . . law governing the dispute.” Id.
As THAN argues, however, “modern transportation and communications 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 (quotation omitted).
Indeed, as the District Court found, the Insurers are large companies engaged in business
on a worldwide basis, and many of them are routinely involved in litigation throughout
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the United States. Cf. Pro Axess, Inc., 428 F.3d at 1280 (finding that, although French
corporation was a “substantial distance” from the forum state of Utah, the corporate
president’s demonstrated ability to travel to the United States for company’s business
dealings minimized concerns that litigating in Utah may burden corporation). But while
modern advances may minimize the burden on the Insurers, they are not significant
enough to tip the scales in favor of exercising jurisdiction. On balance, therefore, this
factor does not weigh in favor of either party.
2. 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 Holdings, Inc., 149 F.3d at
1096. Because THAN is a Kansas resident, Kansas has an interest in providing the
corporation a forum for its suit. In addition, “[t]he state’s interest is . . . implicated where
resolution of the dispute requires a general application of the forum state’s laws.” Id. In
the present case, the policies explicitly state that the law governing the contract is the law
of the Netherlands.4 Dutch law will therefore govern the subject of the dispute—the
interpretation of the insurance policies. Hence, Kansas’s interest in providing a forum is
offset by the fact that Dutch law will govern the dispute. This factor does not therefore
4
The parties dispute whether federal law or the law of the Netherlands governs
interpretation of the Programme’s forum selection clause. But this dispute is unrelated to
the interpretation of the remainder of the contract, which is governed by Dutch law.
THAN has presented no argument to suggest that Dutch law does not govern the
remainder of the contract.
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weigh in favor of either party.
THAN argues that this factor should weigh in favor of exercising jurisdiction in
Kansas because states have a substantial interest in ensuring that their citizens receive
bargained-for insurance proceeds. THAN supports its argument by citing McGee v.
International Life Insurance Co., in which the Supreme Court explained that a state has a
“manifest interest in providing effective means of redress for its residents when their
insurers refuse to pay claims” and noted that “[t]hese residents would be at a severe
disadvantage if they were forced to follow the insurance company to a distant State in
order to hold it legally accountable.” 355 U.S. at 223. But unlike THAN, the plaintiff in
McGee was a single individual beneficiary of a life insurance policy. Id. at 222. In
explaining the disadvantage that insured residents suffer when insurers are not held legally
accountable, the Court noted that “when claims were small or moderate[,] individual
claimants frequently could not afford the cost of bringing an action in a foreign
forum—thus, in effect making the company judgment proof.” Id. at 223. THAN has not
shown that similar considerations apply in this case. To the contrary, THAN is a
corporation primarily dedicated to managing its own liabilities, as well as those of
affiliated companies. Indeed, THAN is already engaged in litigation involving the
policies in another forum.
While we do not deny that Kansas has an interest in this litigation,5 that interest is
5
THAN also asserts that Kansas has an interest in this litigation because it affects
Kansas residents with claims against THAN for alleged asbestos exposure. But this
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offset by the fact that Dutch law governs the contract. We conclude that, overall, this
factor does not weigh in favor of either party. See, e.g., Benton, 375 F.3d at 1079
(concluding factor does not weigh in favor of either party when plaintiff was forum state
resident but dispute was governed by Canadian law).
3. Plaintiff’s Interest in Convenient and Effective Relief
The third factor evaluates whether the plaintiff may receive convenient and
effective relief in another forum. OMI Holdings, Inc., 149 F.3d at 1097. “This factor may
weigh heavily in cases where 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.
We conclude that THAN can get convenient and effective relief in another forum,
the Netherlands. THAN quite clearly is not foreclosed from litigating the insurance
coverage in the Netherlands. In fact, it is already engaged in litigating that question with
twelve of the thirteen Defendants. The only insurance company not a party to the
Netherlands litigation, XL Insurance Company, indicated in an affidavit that it would not
interest is “less compelling” than Kansas’s interest in providing a forum in which THAN,
a Kansas resident, may litigate its dispute with a foreign actor. See OMI Holdings, Inc.,
149 F.3d at 1096 (“Although less compelling, a state may also have an interest in
adjudicating a dispute between two non-residents where the defendant’s conduct affects
forum residents.”). In addition, as the District Court found, THAN has not shown how
the current dispute will affect forum residents’ claims against THAN for asbestos-related
injuries. Thus, in weighing the forum state’s interest in adjudicating the dispute, we will
not consider the potential impact of this lawsuit on forum residents seeking to recover
from THAN.
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object to jurisdiction in the Netherlands. Indeed, the policies contain choice-of-law and
forum-selection clauses that state that any dispute will be governed by the law of the
Netherlands and that all parties to the policies shall submit to the jurisdiction of the
Netherlands. THAN can therefore join all necessary parties in the Netherlands.
Furthermore, as the District Court observed, THAN’s breach-of-contract claim for
failure to pay under the insurance policies necessarily involves resolution of the same
issues as those involved in the Netherlands action: whether the insurance companies
effectively rescinded their policies and whether the asbestos claims are covered under the
policies.6 Thus, the same question is at issue in the now pending Netherlands action and
the litigation here. THAN is less likely to receive convenient and effective relief if it
litigates the same question in two separate forums risking possibly contradictory results.
According to THAN, however, the exercise of jurisdiction in Kansas will not result
in duplicative or conflicting litigation, which would be burdensome and inefficient for all
parties. THAN argues that, until the issue of rescission is adjudicated, a contract of
insurance remains in effect and the duty to pay defense costs is enforceable. The Kansas
action, THAN argues, involves the failure to pay defense costs, while the Netherlands
action involves the separate question of rescission; according to THAN, this precludes the
6
In the Netherlands action, the Insurers seek a declaratory judgment that they
lawfully rescinded the policies and are not liable to pay THAN under those policies. In
the event that the court rules that they did not lawfully rescind the policies, the Insurers
have asked the court to determine whether the asbestos claims are covered under the
policies’ terms.
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finding that the litigation in the Netherlands and Kansas will be the same. But in making
this argument, THAN misinterprets the law. The cases it cites deal with insurance
companies’ obligations to make payments while the rescission question is pending before
the court. See In re WorldCom, Inc. Sec. Litig., 354 F. Supp. 2d 455, 465 (S.D.N.Y.
2005); Assoc. Elec. & Gas Ins. Servs., Ltd. v. Rigas, 382 F. Supp. 2d 685, 691 (E.D. Pa.
2004).7 While the court overseeing this litigation may impose upon the Insurers the
obligation to make payments for the asbestos claims until the rescission question is
decided, this does not change the fact that the same rescission question must ultimately be
decided in both the Netherlands litigation and the Kansas litigation.
THAN has also failed to show that the law of the Netherlands would prejudice it.
THAN claims that the Dutch court cannot possibly understand or appreciate the realities
of the tort system in the United States. For example, according to THAN, a Dutch court
would be unfamiliar with important concepts, such as the reasonableness of defense costs
and settlements in the context of asbestos personal injury actions. We think THAN
7
These cases are distinguishable for another reason. In each case, the court noted
that the insurer’s duty to pay under the insurance policy was contemporaneous with the
insured’s obligation to pay. In re WorldCom, 354 F. Supp. 2d at 464; Rigas, 382 F.
Supp. 2d at 700. Generally, an indemnity policy creates an obligation to reimburse an
already satisfied loss, rather than a contemporaneous duty to pay. In re WorldCom, 354
F. Supp. 2d at 464 (“It is a general principle under insurance law, that the obligation to
pay under a liability policy arises as soon as the insured incurs the liability for the loss, in
contrast to an indemnity policy where the obligation is to reimburse the insured for a loss
that the insured has already satisfied.”). Under the policies in the present case, the
Insurers agree to indemnify insured entities for covered losses, rather than liabilities. The
duty to pay is not, therefore, contemporaneous with the insured’s obligation to pay.
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underestimates both the Dutch court’s and its own abilities. THAN is undoubtedly
capable of presenting objective evidence of the cost of asbestos litigation and settlement to
the court, and the court is capable of evaluating that evidence.
Finally, the record does not indicate that THAN’s burden of litigating its case in the
Netherlands may be so overwhelming as to practically foreclose pursuit of the lawsuit.
THAN claims that the “overwhelming majority” of the documents and witnesses
necessary to try this case are in the United States, in large part in Kansas. We are not
convinced that the location of some evidence in Kansas, or the United States generally, is
sufficient to practically foreclose litigation elsewhere. THAN’s argument ignores the fact
that relevant witnesses and documents are located in the Netherlands as well. Resolving
whether the asbestos claims are covered and whether the Insurers rescinded the contract
will likely require evidence of the contract negotiations and the parties’ intent—evidence
that is available from Philips in the Netherlands, AON Nederland in the Netherlands, and
the Insurers, several of which are located in the Netherlands. Cf. OMI Holdings, Inc., 149
F.3d at 1097 (concluding plaintiff could obtain effective relief in another forum against
defendant Canadian corporation despite plaintiff’s contention that Kansas was the most
efficient forum; of ninety-four witnesses whose testimony was relevant to resolving the
dispute, only seven were from Kansas, forty-two were from other states, and forty-five
were from Canada). On the whole, because THAN may obtain convenient and effective
relief in the Netherlands, this factor weighs against the exercise of jurisdiction in Kansas.
4. Interstate Judicial System’s Interest in Obtaining Efficient Resolution
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The fourth factor asks “whether the forum state is the most efficient place to litigate
the dispute.” OMI Holdings, Inc., 149 F.3d at 1097. “Key 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).
THAN argues that all of the witnesses relevant to the asbestos litigation are located
in the United States and many of them are in Kansas. Specifically, THAN asserts that the
court will have to determine the amount of defense costs and indemnity owed to THAN,
which may require testimony from current and former THAN employees located in
Kansas and underlying defense counsel located in Kansas. First, we will not consider
arguments that the United States generally is the better forum to find in favor of litigation
in Kansas; THAN must show that Kansas specifically is the most efficient forum. And
second, as noted above, THAN fails to recognize all of the witnesses relevant to the case.
Before a court can determine how much indemnity the Insurers owe THAN, it must first
decide whether they owe THAN indemnity at all. In other words, the court must
determine whether the asbestos claims are covered events under the insurance policies.
The relevant witnesses for this question are those who negotiated and entered into the
contract, namely the Insurers and Philips, none of whom are located in Kansas and at least
half of whom are residents of or have their principal place of business in the Netherlands.
Furthermore, other considerations make Kansas an inefficient place to litigate this
dispute. Although the alleged wrong, the Insurers’ failure to provide coverage to THAN,
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occurred in Kansas, Dutch law will govern the dispute.8 Moreover, THAN need not
litigate the action in Kansas to avoid piecemeal litigation. In fact, as discussed above,
litigating the action in Kansas would serve only to create piecemeal litigation and perhaps
even contrary judgments. Overall, therefore, this factor weighs against exercising
jurisdiction in Kansas.
5. State’s 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 state] affects the substantive social policy interests of
other states or foreign nations.” OMI Holdings, Inc., 149 F.3d at 1097. “[T]he Supreme
Court has cautioned that ‘great care and reserve should be exercised when extending our
notions of personal jurisdiction into the international field.’” Id. at 1097–98 (quoting
Asahi, 480 U.S. at 115). We must therefore look closely at the extent to which the
exercise of personal jurisdiction interferes with the Netherlands’ sovereignty. Id.
Relevant considerations 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
8
THAN argues that we should give the application of foreign law little weight,
citing our decision in Rivendell Forest Products, Ltd. v. Canadian Pacific Ltd., 2 F.3d
990, 994 (10th Cir. 1993). In Rivendell, however, we were concerned with an entirely
different issue: when a court may dismiss a case based on forum non conveniens. We
held that the district court abused its discretion when it dismissed a case on grounds of
forum non conveniens because its decision was based largely on the fact that foreign law
applied to the dispute. Id. Our jurisdictional inquiry under the Due Process Clause is, of
course, different from the discretionary determination of forum non conveniens. For
purposes of the jurisdictional inquiry, we have never indicated that the application of
foreign law should be given less weight than other considerations.
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nation’s citizen chose to conduct business with a forum resident.” Id. at 1098 (citations
omitted).
In light of these considerations, we conclude that exercising jurisdiction in Kansas
would interfere with Dutch sovereignty. Although the Insurers chose to conduct business
with THAN by issuing policies providing coverage to Philips’s subsidiaries, including
THAN, none of the Insurers are Kansas residents, and five are residents of the
Netherlands. Furthermore, the law of the Netherlands will govern this dispute. In these
respects, the circumstances of the present case are quite similar to those in OMI Holdings,
Inc., in which we held that the exercise of personal jurisdiction over Canadian
corporations would interfere with Canada’s sovereignty:
Exercising personal jurisdiction in Kansas would affect the policy interests
of Canada. Defendants are Canadian corporations. They entered into
insurance contracts in Canada, with Plaintiff’s Canadian parent company.
The contracts are governed by Canadian law. Moreover, when jurisdiction is
exercised over a foreign citizen regarding a contract entered into in the
foreign country, the country’s sovereign interest in interpreting its laws and
resolving disputes involving its citizens is implicated.
Id.; see also Benton, 375 F.3d at 1080 (holding that the exercise of jurisdiction would
affect Canada’s policy interests because the defendant was a Canadian corporation and
Canadian law would govern the dispute). While we recognize that “possible conflict with
a foreign nation’s sovereignty is not dispositive because, if given controlling weight, it
would always prevent suit against a foreign national in a United States court,” OMI
Holdings, Inc., 149 F.3d at 1097 (quotation omitted), we find that, overall, this factor
weighs against the exercise of jurisdiction in Kansas.
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In sum, three of the five reasonableness factors weigh in favor of the Insurers and
against exercising jurisdiction in Kansas. In addition, the two factors that do not weigh
against the exercise of jurisdiction also do not weigh in its favor. Even though modern
technology and the worldwide nature of the Insurers’ business minimize the burden of
litigating in a foreign forum, they do not completely remove the burden. And although
Kansas has an interest in providing a forum for resolution of its resident’s dispute, this
factor ultimately does not weigh in favor of the exercise of jurisdiction because the law of
the Netherlands, not Kansas, will govern the dispute. Because the Insurers have limited
contacts with Kansas, they need not make a strong showing of unreasonableness to defeat
personal jurisdiction. Under these circumstances, we conclude that the exercise of
personal jurisdiction over the Insurers would violate traditional notions of fair play and
substantial justice.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the District Court’s ruling and DISMISS
THAN’s appeal. We also GRANT the Insurers’ motion requesting that this Court take
judicial notice of the “Statements of Defence” filed on April 26, 2006, in the District
Court for Amsterdam, the Netherlands. See St. Louis Baptist Temple, Inc. v. FDIC, 605
F.2d 1169, 1172 (10th Cir. 1979) (noting that “federal courts, in appropriate
circumstances, may take notice of proceedings in other courts, both within and without the
federal judicial system, if those proceedings have a direct relation to matters at issue”).
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