IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 9, 2009
No. 09-50083 Charles R. Fulbruge III
Clerk
LAURIE D. MCFADIN, d/b/a Two Bar West; STACY L. MCFADIN, d/b/a Two
Bar West,
Plaintiffs - Appellants
v.
LYNN GERBER, d/b/a Foxy Roxy’s, d/b/a Eternal Perspective Handbags;
WILLIAM GERBER, II, d/b/a Foxy Roxy’s, d/b/a Eternal Perspective
Handbags; CONNIE GRENEMYER,
Defendants - Appellees
Appeal from the United States District Court
for the Western District of Texas
Before HIGGINBOTHAM and STEWART, Circuit Judges, and * ENGELHARDT,
District Judge.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
Today we examine a Texas court’s personal jurisdiction over Colorado
residents Connie Grenemyer and Lynn and William Gerber. We agree with the
*
District Judge, Eastern District of Louisiana, sitting by designation.
No. 09-50083
district court that there is no jurisdiction over Connie Grenemyer and disagree
with the district court’s finding of lack of jurisdiction over the Gerbers.
I
Laurie and Stacie McFadin filed suit in the Western District of Texas
against Connie Grenemyer, Lynn Gerber, and William Gerber II claiming that
Grenemyer breached a sales representative agreement and that both Grenemyer
and the Gerbers sold knock-off versions of the McFadins’ handbags. The district
court dismissed the suit for want of personal jurisdiction.
The McFadins design and manufacture hand-made leather goods, such as
handbags and luggage, under the mark Two Bar West, selling wholesale to
brick-and-mortar retail stores. Two Bar West’s principal place of business is
located within the Western District of Texas, where the McFadins reside.
Connie Grenemyer is an independent sales representative who represents
various designers and manufacturers in the Rocky Mountain region, which
encompasses Arizona, Colorado, Idaho, Montana, New Mexico, Utah, and
Wyoming. Grenemyer maintains a showroom at the Denver Merchandise Mart
where she displays her clients’ merchandise. In addition, Grenemyer brings
samples of the merchandise to various retail stores and wholesale markets and
shows in her region. In her business she has never traveled to Texas nor does
she maintain a website.
In either 1995 or 1996, Grenemyer entered into a sales representative
relationship with Two Bar West after the company’s former sales representative
joined Grenemyer. In 1998, the McFadins approached Grenemyer at the Denver
market to discuss a more formal representation, reaching a written agreement.
They agreed that Grenemyer would be Two Bar West’s primary, if not exclusive,
sales representative and Two Bar West provided Grenemyer with samples for
her showroom. Under the agreement, Grenemyer received a twelve-percent
commission on all sales within the Rocky Mountain region and a six-percent
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No. 09-50083
commission on all sales outside that region. Grenemyer took orders from various
retailers at her showroom at the Denver market and on her sales trips, faxing
the orders to Two Bar West in Texas. Two Bar West then shipped the goods
directly to the retailers. The retailers paid Two Bar West, which then mailed
commission checks to Grenemeyer in Colorado. Over the course of the ten year
period, Grenemyer took orders for over $1,000,000 of merchandise from her
Denver show room and sales trips in the Rocky Mountain region. Grenemyer
never took orders in Texas and only $40,000 of the orders were from Texas based
retailers.
In January 2008, the McFadins traveled to Denver and terminated their
agreement with Grenemyer. A dispute arose regarding commissions owed to
Grenemyer, and Grenemyer refused to return the Two Bar West sample
merchandise until the dispute had been settled. The McFadins say that they do
not owe Grenemyer additional commissions and that Grenemyer either
wrongfully possesses or wrongfully sold around 650 pieces of merchandise.
II
In 2006, Two Bar West sold two handbags to Linda Gerber through
Grenemyer. Gerber is the sole proprietor of Foxy Roxy’s, which markets a line
of women’s western wear. Gerber maintains a website, foxyroxys.com, through
which she markets her products. The website provides a telephone number and
email address where potential customers may contact Gerber in Colorado,
however the website does not provide a mechanism to place orders directly. In
addition, Gerber attends shows where her products can be displayed. Gerber’s
only trip to Texas was not for business purposes.
Gerber purchased several more bags from Two Bar West for retail sale.
By 2008, when the McFadins terminated Grenemyer, Two Bar West no longer
sold Gerber its products. The McFadins allege that this cessation of business
followed an email exchange that led Laurie McFadin to believe that Gerber
3
No. 09-50083
would sell the Two Bar West bags over the internet rather than through brick-
and-mortar stores. Gerber maintains she ceased buying the bags “due to
numerous problems.”
That month, Gerber and her husband, William Gerber II, formed Eternal
Perspectives LLC, a Colorado Limited Liability Company. Eternal Perspectives
manufactures and markets “western buffalo hide bags and other buffalo
products.” The bags are marketed through Eternal Perspectives ’s website, Foxy
Roxy’s website, and by Grenemyer, who the Gerbers hired as a sales
representative. The Eternal Perspectives website,
www.eternalperspectives.com, like the Foxy Roxy’s website, contains contact
information for the Gerbers, but offers no means for a client to purchase through
the site. The Eternal Perspectives website also listed Grenemyer as its sales
representative. However Grenemyer maintains she has not seen the site and
has received no calls as a result of the listing. Grenemyer maintains that sales
came solely from purchasers contacting Grenemyer in Colorado, by telephone,
email, or at the shows.
III
In March of 2008, Jason Brockman, a resident of Colorado and another
independent sales representative, brought pieces of the Eternal Perspectives
merchandise line to the Dallas Market Center merchandise trade show in
Dallas, Texas. Brockman and Grenemyer knew each other in Denver and would
occasionally act as sub-representative at shows the other did not attend. As
Grenemyer does not attend the Dallas show, Brockman offered to display some
of Grenemyer’s lines, including the Eternal Perspectives line. While Grenemyer
did not pay Brockman’s costs or plan his trip, the Gerbers and Eternal
Perspectives contributed to the costs of his booth at the show. Under this sub-
representation agreement, the main representative (in this case Grenemyer)
received a two-percent over-ride commission and the sub-representative
4
No. 09-50083
(Brockman) received a ten-percent commission on any sales. At the Dallas show,
Brockman made several sales, though not enough to be profitable and only four
of the customers were Texas-based. Additionally, Brockman wrote two orders
for Eternal Perspectives handbags for Texas-based customers after the show.
All six of the orders were small enough to be considered “personal orders” rather
than “accounts.” These orders were faxed to Grenemyer who then faxed them
to the Gerbers. The Gerbers then paid Brockman his commission directly once
the Gerbers recieved payment from the buyers.
IV
Defendants moved to dismiss for lack of personal jurisdiction, improper
venue, and insufficient service of process, or alternatively, for a change in venue.
The district court, accepting a magistrate judge’s report and recommendation,
dismissed all claims for lack of personal jurisdiction. The McFadins now appeal.
We review the district court’s dismissal for lack of personal jurisdiction de
novo.1 On a challenge to the court’s personam jurisdiction, a plaintiff must make
only a prima facie showing of the predicate facts.2 In turn we “must resolve all
undisputed facts submitted by the plaintiff, as well as all facts contested in the
affidavits, in favor of jurisdiction.”3
A federal court may exercise personal jurisdiction over a nonresident
defendant if (1) the forum state’s long-arm statute confers personal jurisdiction
over that defendant; and (2) the exercise of personal jurisdiction comports with
the Due Process Clause of the Fourteenth Amendment.4 As the Texas long-arm
1
Moncrief Oil Int’l v. OAO Gazprom, 481 F.3d 309, 311 (5th Cir. 2007).
2
Luv N’ Care, Ltd., v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006).
3
Id.
4
Moncrief Oil Int’l, 481 F.3d at 311.
5
No. 09-50083
statute extends as far as constitutional due process allows, we only consider the
second step of the inquiry.5
The relevant standard for due process is rote: “The plaintiff must show
that (1) the defendant purposefully availed himself of the benefits and
protections of the forum state by establishing ‘minimum contacts’ with the forum
state, and (2) the exercise of personal jurisdiction over that defendant does not
offend traditional notions of ‘fair play and substantial justice.’” 6 “Where a
defendant ‘has continuous and systematic general business contacts’ with the
forum state, the court may exercise ‘general jurisdiction’ over any action brought
against the defendant. Where contacts are less pervasive, the court may still
exercise ‘specific’ jurisdiction ‘in a suit arising out of or related to the defendant’s
contacts with the forum.’”7 The McFadins claim only specific jurisdiction.
In this circuit, specific personal jurisdiction is a claim-specific inquiry: “A
plaintiff bringing multiple claims that arise out of different forum contacts of the
defendant must establish specific jurisdiction for each claim.” 8 We have
articulated a three-step analysis for specific jurisdiction: “(1) whether the
defendant has minimum contacts with the forum state, i.e., whether it purposely
directed its activities toward the forum state or purposefully availed itself of the
privileges of conducting activities there; (2) whether the plaintiff’s cause of
action arises out of or results from the defendant’s forum-related contacts; and
(3) whether the exercise of personal jurisdiction is fair and reasonable.”9
5
Id. at 311 n.1.
6
Id. at 311 (citing Int’l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)).
7
Luv N’ Care, 438 F.3d at 469 (citing Helicopteros Nacionales de Columbia, S.A. v.
Hall, 466 U.S. 408, 415 (1984)).
8
Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266 (5th Cir. 2006).
9
Id. at 271 (citing Nuovo Pignone, SpA v. STOREMAN ASIA M/V, 310 F.3d 374 (5th
Cir. 2002)).
6
No. 09-50083
The “minimum contacts” inquiry is fact intensive and no one element is
decisive; rather the touchstone is whether the defendant’s conduct shows that
it “reasonably anticipates being haled into court.” 10 The defendant “must not be
haled into a jurisdiction solely as a result of ‘random,’ ‘fortuitous,’ or ‘attenuated’
contacts, or of the ‘unilateral activity of another party or third person.’” 11
In determining whether or not exercise of jurisdiction is fair and
reasonable, defendants bear the burden of proof and “it is rare to say the
assertion [of jurisdiction] is unfair after minimum contacts have been shown.”12
In this inquiry we examine five factors: “(1) the burden on the nonresident
defendant, (2) the forum state’s interests, (3) the plaintiff’s interest in securing
relief, (4) the interest of the interstate judicial system in the efficient
administration of justice, and (5) the shared interest of the several states in
furthering fundamental social policies.”13
V
The McFadins allege the court has specific jurisdiction over Grenemyer
with respect to both their contract and tort claims. We find that there is no
personal jurisdiction over Grenemyer with respect to the contract claim. It is
clearly established that “merely contracting with a resident of the forum state
does not establish minimum contacts.” 14 Jurisdiction must not be based on the
fortuity of one party residing in the forum state. The McFadins rely on the fact
10
Luv N’ Care, 438 F.3d at 470 (citing World Wide Volkswagen Corp., v. Woodson, 444
U.S. 286, 297 (1980)).
11
Electrosource, Inc., v. Horizon Battery Techs., Ltd., 176 F.3d 867, 871–72 (5th Cir.
1999) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)); see also Moncrief Oil
Int’l, 481 F.3d at 312.
12
Wien Air Alaska, Inc., v. Brandt, 195 F.3d 208, 215 (5th Cir. 1999).
13
Luv N’ Care, 438 F.3d at 473.
14
Moncrief Oil Int’l, 481 F.3d at 311; see also Burger King Corp., 471 U.S. at 478.
7
No. 09-50083
that the contract created a ten-year sales representation relationship between
the parties and that there were significant communications—including sales
orders and commission payments—between Grenemyer in Colorado and the
McFadins in Texas. In addition, the McFadins point to the sales by Grenemyer
to Texas residents. These contacts are insufficient.
We have held that communications relating to the performance of a
contract themselves are insufficient to establish minimum contacts.15 Here the
contract was centered around Grenemyer’s operations outside Texas. The
McFadins approached Grenemyer about establishing the representation
relationship in Colorado, Grenemyer’s sales region did not include Texas but
explicitly focused on the Rocky Mountain states, and Grenemyer never traveled
to Texas to sell the McFadins’ handbags. The entire purpose of the agreement
was to open up markets outside of Texas to Two Bar West handbags.
The McFadins point to Product Promotions, Inc., v. Cousteau 16 and
Mississippi Interstate Express v. Transpo, Inc.17 to support the proposition that
contracting with a known Texas resident is sufficient to establish jurisdiction in
Texas. However, these cases are distinguishable from the instant one. In
Product Promotions, the court rested heavily on the fact that the contract was
consummated in Texas and that Texas law would likely apply to the contract.
The defendants in Product Promotions “had reason to foresee that enforcement
and protection of its own rights under the contract might depend on the laws of
15
Freudensprung v. Offshore Technical Services, Inc., 379 F.3d 327 344 (5th Cir. 2004)
(“this court has repeatedly held that the combination of mailing payments to the forum state,
engaging in communications related to the execution and performance of the contract, and the
existence of a contract between the nonresident defendant and a resident of the forum are
insufficient to establish minimum contacts”).
16
495 F.2d 483 (5th Cir. 1974).
17
681 F.2d 1003 (1982).
8
No. 09-50083
Texas.”18 Here, however, the McFadins traveled to Colorado to establish the
representation relationship and it appears that the contract was formed in
Colorado.19 Likewise, Grenemyer’s performance of the contract occurred in
Colorado and the Rocky Mountain region.
Transpo is likewise inapposite. The McFadins argue that Transpo stands
for the proposition that a sustained contractual relationship supports a finding
of minimal contacts. However, in Transpo, we found that the forum state was
“clearly the hub of the parties’ activities.” 20 That case addressed the context of
interstate trucking, where there was no “clear local nexus with any particular
jurisdiction.”21 That is not the case here. Denver was the hub of activities.
Grenemyer represented the McFadins primarily from her showroom in Denver
and while Grenemyer did make a number of sales trips, they were to the Rocky
Mountain region and did not include trips to Texas. The little contact with
Texas came only from the fortuity of the plaintiffs’ residence there. We therefore
find that there are insufficient contacts to establish personal jurisdiction over
Grenemyer with respect to the contract claim. Finding no minimum contacts,
we need not inquire into fairness.
VI
18
Product Promotions, 495 F.2d at 497.
19
There is a strong argument that Colorado law would apply to this contract. In
determining which law to apply to multistate contracts, Texas choice of law rules look to the
factors listed in Restatement section 188 in order to determine which state “has the most
significant relationship to the transaction.” Sonat Exploration Co., v. Cudd Pressure Control,
Inc., 271 S.W.3d 228, 233 (Tex. 2008). In this particular contract, all factors—including the
place of contracting, place of negotiation, place of performance, location of the subject
matter—except the residency of the McFadins, point to Colorado as the state with the most
significant relationship.
20
Transpo, 681 F.2d at 1011.
21
Id.
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No. 09-50083
Nor is there jurisdiction over the McFadins’ tort claims against
Grenemyer. “When a nonresident defendant commits a tort within the state, or
an act outside the state that causes tortious injury within the state, that tortious
conduct amounts to sufficient minimum contacts with the state by the defendant
to constitutionally permit courts within that state, including federal courts, to
exercise personal adjudicative jurisdiction over the tortfeasor.”22 Additionally,
“[e]ven an act done outside the state that has consequences or effects within the
state will suffice as a basis for jurisdiction in a suit arising from those
consequences if the effects are seriously harmful and were intended or highly
likely to follow from the nonresident defendant’s conduct.” 23
The McFadins argue that Grenemyer had sufficient minimum contacts
with Texas because her sales of allegedly infringing handbags caused an injury
in Texas and there was an agency relationship between Brockman and
Grenemyer that supports jurisdiction based on the sales in Dallas. While the
actions of an agent may establish minimum contacts over a principal,24 we agree
with the district court that the relationship between Brockman and Grenemyer
will not sustain attribution to Grenemyer of his actions in Texas. Brockman and
Grenemyer apparently had a revenue sharing agreement and Grenemyer loaned
Brockman samples of the Gerbers’ goods for display in his Dallas booth. But
Grenemyer did not direct Brockman to sell bags in Texas. Such conduct is
insufficient to establish a relevant agency relationship.25
22
Guidry v. United States Tobacco Co., 188 F.3d 619, 628 (5th Cir. 1999).
23
Id. (citing Calder v. Jones, 465 U.S. 783, 789-90 (1984)).
24
See Product Promotions, 495 F.2d at 492; 4A CHARLES ALAN WRIG HT , ARTHUR R.
MILLER & EDW ARD H. COOPER , FEDERAL PRACTICE AND PROCEDURE § 1069.5 (3d ed. 1998).
25
See Indian Harbor Ins. Co. v. Valley Forge Ins. Group, 535 F.3d 359, 364 (5th Cir.
2008) (stating that under Texas law to prove agency “evidence must establish that the
principle has both the right: (1) to assign the agent’s task; and (2) to control the means and
details of the process by which the agent will accomplish that task”). Grenemyer’s commission
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No. 09-50083
The McFadins allege that Grenemyer’s sale of the Gerbers’ handbags has
caused injury in Texas and that these injurious effects should be sufficient to
establish personal jurisdiction. It is true that in Guidry, we applied the “effects
test” of Calder v. Jones to torts outside the libel context. However, the effects
doctrine is not as expansive as the McFadins argue. As we have held
“[f]oreseeable injury alone is not sufficient to confer specific jurisdiction, absent
the direction of specific acts toward the forum.”26 Here, the actions of selling
allegedly infringing handbags are not directed towards Texas in any manner.27
That Grenemyer is listed on the Gerbers’ Eternal Perspectives website is
here of no moment. We have distinguished “passive” and “active” websites in
examining a claimed showing of minimum contacts.28 Here the website was
passive, providing no means for orders, offering only Grenemyer’s contact
information. We have found similar webpages to be insufficient to meet
minimum contacts.29
The McFadins also rest heavily on our decision in Luv N’ Care, Ltd. v.
Insta-Mix, Inc.30 applying the Supreme Court’s “stream of commerce” doctrine
on sales by Brockman is perhaps best described as a fee for allowing Brockman access to
Grenemyer’s clients.
26
Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 212 (5th Cir. 1999) (expressing concern
that too broad a reading would subject a nonresident defendant “to jurisdiction in Texas for
an intentional tort simply because the plaintiff’s complaint alleged injury in Texas to Texas
residents regardless of the defendant’s contacts, and would have to appear in Texas to defend
the suit no matter how groundless or frivolous the claim may be”).
27
Nor does the arrangement with Brockman change this analysis. Brockman was not
acting as Grenemyer’s agent.
28
Revell v. Lidov, 317 F.3d 467, 472 (5th Cir. 2002).
29
See Mink v. AAAA Dev. LLC, 190 F.3d 333, 336-37 (5th Cir. 1999); see also Revell, 317
F.3d at 472 (highlighting the factors in Mink—identical to those at issue here—which
categorize the page as passive for jurisdiction analysis purposes).
30
438 F.3d 465 (5th Cir. 2006)
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No. 09-50083
to trademark infringement claims. We held that “[w]here a defendant knowingly
benefits from the availability of a particular state’s market for its products, it is
only fitting that the defendant be amenable to suit in that state.” 31 And where
a defendant places a product into the stream of commerce with the intention
that it reach foreign markets, the defendant may reasonably be hailed into court
in those forums for claims arising out of the product. But Luv N’ Care does not
control here. There the defendant was a Colorado distributor selling products
to Wal-Mart for resale around the country, including sixty-five orders with
invoices indicating that they were to be shipped to Louisiana, the forum state.
Importantly, the court distinguished the situation in Luv N’ Care from that in
Charia v. Cigarette Racing Team, Inc.,32 which found that “four sporadic and
isolated sales did not establish sufficient basis for jurisdiction.” Grenemyer
received, at most, a two-percent commission for sales by Brockman of the
Gerbers’ goods. She did not direct Brockman to go to Texas, nor did she supply
the goods that were ultimately sold. Thus her involvement in the sale of the
Gerbers’ handbags in Texas could at most be described as peripheral. Such a
tenuous economic connection to the forum is insufficient to establish minimum
contacts.
VII
The McFadins also appeal the district court’s dismissal of their tort claims
against the Gerbers for lack of personal jurisdiction. We disagree with the
district court and find that the exercise of personal jurisdiction over the Gerbers
would not offend due process.
Again we apply the three-step analysis to determine specific personal
jurisdiction: “(1) whether the defendant has minimum contacts with the forum
31
Id. at 470.
32
583 F.2d 184, 189 (5th Cir. 1978).
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No. 09-50083
state, i.e., whether it purposely directed its activities toward the forum state or
purposefully availed itself of the privileges of conducting activities there; (2)
whether the plaintiff’s cause of action arises out of or results from the
defendant’s forum-related contacts; and (3) whether the exercise of personal
jurisdiction is fair and reasonable.”33
Here, the Gerbers’, through their relationship with Brockman, sufficiently
directed the sale of their handbags to Texas such that they could reasonably
anticipate being haled into court there. The Gerbers hired Brockman to sell
their bags to prospective retailers at the Dallas Market Center. To further his
endeavors, they contributed to the costs of Brockman’s booth and the show and
agreed to pay Brockman a ten-percent commission on all sales of their bags.
Moreover, Brockman did in fact sell bags to buyers at the Dallas show (four of
whom were residents of Texas). This is not a case where the court is forced to
look to the defendants’ placement of products in the stream of commerce 34 or the
effects of its actions outside the forum state within the state.35 Here, the
Gerbers purposefully directed the sale of their goods, through Brockman, in
Texas, thus allegedly committing a tort there while availing themselves of the
benefits of the Texas market. Such action is sufficient to establish minimum
contacts with Texas.36
Addressing the second step, the tort claims arise directly from sales
within Texas. The McFadins allege that the Gerbers’ handbags, sold through
Brockman in Dallas, infringe on their trademarks.
33
Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006) (citing Nuovo
Pignone, SpA v. STOREMAN ASIA M/V, 310 F.3d 374 (5th Cir. 2002)).
34
See Luv N’ Care, 438 F.3d at 470 (discussing “stream of commerce theory” and citing
World Wide Volkswagen Corp., v. Woodson, 444 U.S. 286, 298 (1980)).
35
See Calder v. Jones, 465 U.S. 783, 789-90 (1984).
36
Guidry v. United States Tobacco Co., 188 F.3d 619, 628 (5th Cir. 1999).
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No. 09-50083
After finding that the claim arises out of the minimum contacts with the
forum state, we ask if exercise of jurisdiction is fair and reasonable using the five
factors we have listed. Here Texas has an interest in protecting its residents’
property rights and providing a convenient forum for its residents to resolve
their disputes. The McFadins have an obvious interest in securing relief as
quickly and as efficiently for themselves as possible. In addition, it is unlikely
that efficient resolution of this case would be disserved by resolution in Texas as
opposed to Colorado. The evidence at issue is not difficult to transport and there
would be no significant burden on the court in hearing this case in Texas. As we
have stated before, “once minimum contacts are established, the interests of the
forum and the plaintiff justify even large burdens on the defendant.” 37 The
generalized difficulty in traveling to Texas is here not a burden violative of due
process and we find that the court may exercises personal jurisdiction over the
Gerbers with respect to the McFadins’ tort claims.
We AFFIRM in part and REVERSE in part; the case is REMANDED to
the district court for further proceedings.
37
Id.
14