Epps v. Stewart Information Services Corp.

• Decision Date: 01 April 2003
• Docket Number: No. 02-2160.,02-2160.
• Citation: 327 F.3d 642
• Parties: William A. EPPS and Leslie A. Epps, on behalf of themselves and all others similarly situated, Appellants, v. STEWART INFORMATION SERVICES CORP., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

327 F.3d 642

William A. EPPS and Leslie A. Epps, on behalf of themselves and all others similarly situated, Appellants, v. STEWART INFORMATION SERVICES CORP., Appellee.

No. 02-2160.

United States Court of Appeals, Eighth Circuit.

Submitted: November 7, 2002.

Filed: April 1, 2003.

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Steven E. Cauley, argued, Little Rock, Arkansas (J. Allen Carney and Randall K. Pulliam, on the brief), for appellant.

Marie B. Miller, argued, Little Rock, Arkansas (Richard L. Lawrence, on the brief), for appellee.

Before RILEY, BEAM, and SMITH, Circuit Judges.

SMITH, Circuit Judge.

William and Leslie Epps filed a class-action suit against Stewart Information Services Corporation ("SISCO").¹ The Eppses claimed that during the class period, SISCO illegally compensated realty companies and brokers in violation of the Real Estate Settlement Procedures Act ("RESPA"). The District Court² dismissed their complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). We affirm.

I. Background

The Eppses complained that SISCO will pay referral fees to realty companies and brokers if those companies' agents sell title insurance to buyers through a SISCO company named "TitleMax." The Eppses contended that TitleMax's receipt of payments turns the referring agent into a provider of title services. They alleged that SISCO performs all settlement services and that the real estate agent retains up to 60% of the settlement-services fees paid by the purchaser. The Eppses further claimed that SISCO does not disclose to home buyers the financial arrangement it has with the brokers as required by RESPA. Finally, the Eppses claimed that SISCO leased office space in buildings owned by realty companies and paid those companies rent at higher-than-market-value rates. The Eppses alleged that these overpayments are actually "kickbacks" made in exchange for referrals.

SISCO moved to dismiss the Eppses' complaint for lack of personal jurisdiction. In support of its motion, SISCO offered the affidavit of Sue Pizzitola, its Assistant Vice President and Assistant Secretary-Treasurer. Pizzitola averred that SISCO had no direct connection to Stewart Title.³ The Eppses countered with an affidavit from their attorney. He asserted that SISCO's internal documentation and its Securities and Exchange Commission ("SEC") reports showed SISCO maintained contacts with Stewart Title substantial enough to warrant the District Court's exercise of personal jurisdiction.⁴ Through these documents, the Eppses sought to demonstrate that SISCO did not draw any distinction between itself and its subsidiaries, but instead held itself out as a title insurance company providing title insurance and other settlement services "in all 50 states." SISCO acknowledged owning subsidiaries, including some in Arkansas. SISCO maintained, however, that it was merely a holding company and that the Eppses' proof failed to establish that SISCO, and not its subsidiaries, had minimum contacts with Arkansas. In their response, the Eppses attached a SISCO press release announcing the results of the company's 2001 fourth quarter and yearly earnings. In the release, SISCO stated that it provided title insurance and related information services through issuing locations in the United States, including Arkansas.

After reviewing the parties' pleadings and affidavits, the District Court dismissed the Eppses' complaint without prejudice pursuant to Federal Rule of Civil Procedure 12(b)(2). The District Court determined that the Eppses failed to show that SISCO had sufficient minimum contacts with Arkansas to allow the court to exercise personal jurisdiction over SISCO.

II. Standard of Review

Rule 12(b)(2) motions are reviewed de novo. First National Bank of Lewisville, Ark. v. First National Bank of Clinton, Kentucky, 258 F.3d 727, 729 (8th Cir.2001); Moog World Trade Corp. v. Bancomer, S.A., 90 F.3d 1382, 1384 (8th Cir.1996). If the District Court does not hold a hearing and instead relies on pleadings and affidavits, then we must look at the facts in the light most favorable to the nonmoving party and resolve all factual conflicts in favor of that party. First National, 258 F.3d at 729.

To defeat a motion to dismiss for lack of personal jurisdiction, the nonmoving party need only make a prima facie showing of jurisdiction. Falkirk Min. Co. v. Japan Steel Works, Ltd., 906 F.2d 369, 373 (8th Cir.1990); Watlow Elec. Mfg. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir.1988). The party seeking to establish the court's in personam jurisdiction carries the burden of proof, and the burden does not shift to the party challenging jurisdiction. Gould v. P.T. Krakatau Steel, 957 F.2d 573, 575 (8th Cir.1992); Newhard, Cook & Co. v. Inspired Life Centers, Inc., 895 F.2d 1226, 1228 (8th Cir.1990). While the plaintiffs bear the ultimate burden of proof, jurisdiction need not be proved by a preponderance of the evidence until trial or until the court holds an evidentiary hearing. Dakota Industries, Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991) (citing CutCo Ind. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986)).

III. Discussion

On appeal, the Eppses argue that they made a prima facie showing of personal jurisdiction through evidence of SISCO's connection with and control of its Arkansas subsidiaries, Stewart Guaranty and Stewart Title. Specifically, the Eppses argue that the law is clear that when one corporation is so organized and controlled by another that the subsidiary is merely an instrumentality or adjunct of its parent corporation, the parent can be found to have subjected itself to jurisdiction under a state's long-arm statute. They contend their documentary evidence established conclusively that SISCO directed its activities towards Arkansas residents to such an extent that it could be said to have been doing business in Arkansas.

SISCO responds that the District Court does not have personal jurisdiction over it because SISCO has no contacts with the State of Arkansas other than its ownership of stock in companies that have ties to Arkansas, and that this is not sufficient to subject it to Arkansas's long-arm statute. As such, in order for the Eppses to prevail, they must show by clear proof that SISCO either abused its corporate organizational form for improper purposes or that SISCO so controls the "operational minutia" of its subsidiaries that have minimum contacts with Arkansas that SISCO itself can be said to be doing business in Arkansas. SISCO argues that the court correctly found that the proof offered by the Eppses was insufficient to show the nature, quantity, or quality of SISCO's contacts with Arkansas. We agree.

A. Applicable Law

Because Arkansas's long-arm statute extends jurisdiction over nonresidents to the maximum extent permitted by the Due Process Clause, see Ark.Code Ann. § 16-4-101 (Repl.1999), our inquiry is whether the exercise of personal jurisdiction over SISCO would comport with due process. First National, 258 F.3d at 729; Gould, 957 F.2d at 575. Due process requires sufficient "minimum contacts" between the defendant and the forum state so that "maintenance of the suit does not offend traditional notions of fair play and substantial justice." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). "[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, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). Defendant's contacts must be more than "random, fortuitous, or attenuated." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).

In International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the United States Supreme Court expanded the limits of state jurisdiction over nonresident defendants, while leaving in place basic due process limitations on that power. The Court focused not on the presence of the defendant in the state, as it had fifty years earlier in Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877), but rather on the nature of the contacts that the nonresident defendant had with the forum state. The Court stated that attention must be paid to the "quality and nature" of the contacts, as well as to whether the defendant, through those contacts, enjoyed the "benefits and protections" of the laws of the foreign state. International Shoe, 326 U.S. at 319, 66 S.Ct. 154. The Court further noted that situations exist in which a nonresident defendant's contacts with a forum state may be so substantial and continuous as to justify jurisdiction over that defendant even though the cause of action is "entirely distinct from those activities." Id. at 318, 66 S.Ct. 154. The Court's touchstone inquiries ask whether personal jurisdiction over the nonresident defendant is based on "minimum contacts" and whether assumption of personal jurisdiction would offend "traditional notions of fair play and substantial justice." Id. at 316, 66 S.Ct. 154.

Since International Shoe, the Court has revisited and refined the analysis of personal-jurisdiction issues. A nonresident defendant's contacts with a forum state, for example, must be sufficient to cause the defendant to "reasonably anticipate being haled into court there." World-Wide Volkswagen Corp., 444 U.S. at 297, 100 S.Ct. 559. The Court has also identified two types of personal jurisdiction: general and specific. When a cause of action arises out of or is related to a defendant's contacts with the forum state, the exercise of personal jurisdiction is one of specific jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Burlington Industries, Inc. v....