Alpine View Co. v. Atlas Copco AB, 97-20879

Citation205 F.3d 208
Decision Date25 February 2000
Docket NumberNo. 97-20879,97-20879
Parties(5th Cir. 2000) ALPINE VIEW COMPANY LIMITED; BJORN HANSEN Plaintiffs - Appellants v. ATLAS COPCO AB; ATLAS COPCO ROBBINS; ATLAS COPCO COMPRESSORS INCORPORATED; ATLAS COPCO COMPTEC INCORPORATED Defendants - Appellees
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Appeal from the United States District Court for the Southern District of Texas

Before KING, Chief Judge, and REYNALDO G. GARZA and EMILIO M. GARZA, Circuit Judges.

KING, Chief Judge:

Plaintiffs-Appellants challenge the district court's grant of Defendants-Appellees' motions to dismiss for lack of personal jurisdiction and for forum non conveniens. They also challenge a magistrate judge's order denying them discovery on matters they argue are relevant to the personal jurisdiction issue. We conclude that the district court did not err in dismissing the case against all of the defendants and therefore affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

This case arises out of an alleged breach of a 1992 Intentional Agreement ("1992 Agreement") between Alpine View Company, Limited ("Alpine View"), and Uniroc AB ("Uniroc"), a wholly-owned subsidiary of the Swedish holding company, Atlas Copco AB ("ACAB"). In 1989, Bj°rn Hansen, the president of Alpine View, was granted exclusive worldwide rights to the distribution and sale of offshore drill bits manufactured by Shanghai Machinery & Equipment Import/Export Corporation ("SMEC"), a Chinese company. To facilitate the sale of these products, Hansen sought an established distributor, and eventually executed the 1992 Agreement with Uniroc. Under the 1992 Agreement, Uniroc was to purchase drill bits from Bj°rn Hansen A/S, and eventually become the exclusive distributor of those products in certain specified sectors of the world market. Uniroc was to pay Alpine View a commission based on net sales to users and distributors outside the Atlas Copco Group, which comprises ACAB and its seventy-one subsidiaries. To enhance its ability to deal directly with SMEC, Uniroc was also to enter into a separate distributorship agreement with that company. The existence of the separate distributorship agreement was a pre-condition for the effectiveness of the 1992 Agreement.

The 1992 Agreement specified that all impasses were to be submitted to arbitration in Oslo, Norway. A dispute arose that was not resolved through negotiation, and in 1993, Alpine View filed a writ of summons for an arbitration case in Oslo against ACAB and Uniroc. As grounds for the suit, Alpine View alleged that "the defendants are guilty of wilfully and negligently committing a breach of contract and unlawfully interfering in the plaintiff's business affairs and other contractual rights in China." The arbitration panel issued its decision on July 2, 1996, dismissing the claim against ACAB as it was not a party to the 1992 Agreement's arbitration clause and finding in favor of Uniroc because Alpine View had decided to withdraw its claim.

On August 5, 1995, prior to the arbitration proceeding's conclusion, Alpine View and Hansen ("Appellants") filed suit in the 281st Judicial District Court of Harris County, Texas against four defendants; ACAB, Atlas Copco Compressors, Inc. ("Compressors"), Atlas Copco Comptec, Inc. ("Comptec"), and Atlas Copco Robbins ("Robbins"). Compressors, Comptec, and Robbins are each wholly-owned subsidiaries of Atlas Copco North America, Inc. ("ACNA"), which is, in turn, now only partially owned by ACAB. Neither Uniroc nor ACNA was named as a party to the action. The suit alleges breach of contract, common law fraud, fraudulent inducement, breach of the duty of good faith and fair dealing, tortious interference with a contract, and negligent misrepresentation. Appellants claim that all of the named defendants jointly violated the 1992 Agreement by forming their own joint venture with SMEC, thereby undermining Appellants' rights. None of the named defendants signed the 1992 Agreement.

On September 13, 1995, Comptec, Compressors, and Robbins removed the case to the U.S. District Court for the Southern District of Texas. Alpine View is incorporated under the laws of the British Virgin Islands and Hansen is a resident of Norway. Compressors and Comptec are each Delaware corporations, with Compressors having its principal place of business in Massachusetts and Comptec having its in New York. Robbins is a Washington corporation and has its principal place of business in that state. The basis for removal was diversity jurisdiction under 28 U.S.C. 1332, with the removing defendants arguing that ACAB, formed under the laws of Sweden, was not a proper party to the case and had been joined simply to defeat subject-matter jurisdiction.

A flurry of motions followed removal. Appellants filed a motion to remand the case. Robbins filed a motion for dismissal based on a lack of personal jurisdiction. ACAB filed motions for dismissal based on a lack of personal jurisdiction, on insufficiency of service of process, and on a lack of subject-matter jurisdiction. Compressors and Comptec filed motions to dismiss for forum non conveniens. On January 19, 1996, defendants were ordered to produce documents, in the context of Federal Rule of Civil Procedure 26, regarding the jurisdictional issues raised. The case was referred to Magistrate Judge Mary Milloy under 28 U.S.C. 636(b)(1)(A) and (B) on January 25, 1996.

On March 8, 1996, Appellants filed motions to compel ACAB to respond to interrogatories and production requests. A similar motion was filed on April 11 with regard to Robbins. The magistrate judge held a motion conference on June 18, and entered an order on that date granting in part, and denying in part, the Appellants' motions to compel. The Appellants requested that the magistrate judge review her order, and on June 24, she indicated with a notice to the parties that she declined to undertake that review. Pursuant to Federal Rule of Civil Procedure 72, Appellants filed on July 2 specific objections to the magistrate judge's decisions regarding the motions to compel.

On July 30, the magistrate judge issued a memorandum and recommendation that ACAB's and Robbins' motions to dismiss for lack of personal jurisdiction be granted, and that Appellants' motion for remand be denied as moot. The next day, she issued a memorandum and recommendation that Comptec's and Compressors' motions to dismiss for forum non conveniens be granted. Timely objections to these recommendations were filed. The district court denied Appellants' motion to remand on September 5, 1996. Both dismissal recommendations were adopted by the district court on September 30. In addition, the district court ordered that ACAB's motion to dismiss for lack of subject-matter jurisdiction be denied as moot. 1 Appellants' subsequent motions to amend and for a new trial were denied. They timely appealed.

On August 20, 1998, a three-member panel following this court's en banc decision in Marathon Oil Co. v. A.G. Ruhrgas, 145 F.3d 211 (5th Cir. 1998), issued an order vacating both the magistrate judge's recommendations and the district court's orders because the district court had dismissed for lack of personal jurisdiction without first considering motions challenging subject-matter jurisdiction. See Alpine View Co. Ltd. v. Atlas Copco A.B., 180 F.3d 628 (5th Cir. 1998). The Appellants timely appealed this order. The Supreme Court granted certiorari, vacated the judgment, and remanded the case for further consideration in light of its decision in Ruhrgas AG v. Marathon Oil Co., 119 S. Ct. 1563 (1999). See Atlas Copco AB v. Alpine View Co., Ltd., 119 S. Ct. 1790 (1999). We now undertake that review.

II. THE DISMISSAL OF APPELLANTS' CLAIMS

This case raises a number of issues regarding the district court's dismissal of Appellants' claims against the Appellees. We first determine whether the district court abused its discretion in dismissing those claims without first considering motions challenging its subject-matter jurisdiction. See Ruhrgas AG v. Marathon Oil Co., 119 S. Ct. 1563 (1999). We next address Appellants' contentions that jurisdictional discovery was improperly limited and that the court erred in dismissing claims against ACAB and Robbins for lack of personal jurisdiction. Finally, we consider Appellants' argument that the district court erred in dismissing claims against Compressors and Comptec for forum non conveniens.

A. Personal Jurisdiction Before Subject-Matter Jurisdiction

In Ruhrgas AG v. Marathon Oil, 119 S. Ct. 1563 (1999), the Supreme Court rejected a rule, applicable to removed cases, that required a district court to assess whether it had subject-matter jurisdiction before it could determine whether motions to dismiss for lack of personal jurisdiction should be granted. Id. at 1569. We read the Ruhrgas AG Court's opinion to direct lower courts facing multiple grounds for dismissal to consider the complexity of subject-matter jurisdiction issues raised by the case, as well as concerns of federalism, and of judicial economy and restraint in determining whether to dismiss claims due to a lack of personal jurisdiction before considering challenges to its subject-matter jurisdiction. We use the same factors to guide our assessment of whether the district court abused its discretion see id. at 1572, in its conclusion in this case.

In the case before us, two motions challenged the court's subject-matter jurisdiction. Appellants sought remand on the ground that the alleged basis for removal - diversity of citizenship under 1332 - does not exist because alien parties are present on both sides of the suit. One of those parties is ACAB, which Appellants contend is a proper party. 2 In a motion filed prior to the resolution of the Norway arbitration proceeding, ACAB challenged subject-matter jurisdiction pursuant to the Convention of the...

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