Scullin Steel Co. v. National Ry. Utilization Corp.

• Decision Date: 29 April 1982
• Docket Number: No. 81-1909,81-1909
• Parties: SCULLIN STEEL COMPANY, Appellant, v. NATIONAL RAILWAY UTILIZATION CORP., Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 309

676 F.2d 309

SCULLIN STEEL COMPANY, Appellant, v. NATIONAL RAILWAY UTILIZATION CORP., Appellee.

No. 81-1909.

United States Court of Appeals Eighth Circuit.

Submitted Feb. 9, 1982.

Decided April 27, 1982.

As Revised April 29, 1982.

Jim J. Shoemake, John W. O'Neil, Jr., Michael B. Minton, Guilfoil, Symington, Petzall & Shoemake, St. Louis, Mo., for Scullin Steel Co.

Thomas C. Walsh, William E. McCurdy, Jr., St. Louis, Mo., for appellee; Bryan, Cave, McPheeters & McRoberts, St. Louis, Mo., of counsel.

Before HEANEY, McMILLIAN and ARNOLD, Circuit Judges.

McMILLIAN, Circuit Judge.

Scullin Steel Co. appeals from a final order entered in the District Court ¹ for the Eastern District of Missouri dismissing its complaint against National Railway Utilization Corp. (NRUC) for lack of personal jurisdiction. For the reasons discussed below, we affirm the judgment of the district court.

The following facts are based upon the memorandum opinion of the district court, Scullin Steel Co. v. National Railway Utilization Corp., 520 F.Supp. 383 (E.D.Mo.1981). Scullin Steel is a Delaware corporation with its principal place of business in St. Louis, Missouri. NRUC is a South Carolina corporation with its principal place of business in Philadelphia, Pennsylvania. Scullin Steel manufactures steel castings used in the manufacture of railroad cars. NRUC manufactures and leases railroad cars. NRUC is not authorized to do business in Missouri, has no office or personnel in Missouri, owns no real property in Missouri, and has no agent for service of process or for any other purpose in Missouri.

In June 1978 an officer of Scullin Steel went to Philadelphia to negotiate a contract for the sale of railroad "car sets" (side frames and bolsters) to NRUC. The negotiations were successful. Scullin Steel prepared the original sales agreement and an amended sales agreement which superseded the original. NRUC executed the agreements in Philadelphia, Scullin Steel in St. Louis. Under the terms of the amended sales agreement, Scullin Steel was to sell NRUC 2,700 car sets from January 1, 1979 through December 31, 1981, at the rate of 75 car sets per month, "F.O.B. Seller's Plant, St. Louis, Missouri." In early 1979 the sales agreement was further amended, apparently on the initiative of Scullin Steel. As amended, the sales agreement was extended for two years and provided for the sale of an additional 3,662 car sets. No NRUC employee visited Missouri in connection with the negotiation, amendment or extension of the sales agreement or the supervision of Scullin Steel's performance.

Scullin Steel's only plant is and has been located in St. Louis, Missouri; therefore, all the manufacturing was performed in Missouri. All payments by NRUC were sent to Scullin Steel in St. Louis; all shipments were made from St. Louis.

NRUC had specified certain details for the castings for the car sets. Scullin Steel's engineering department prepared drawings incorporating NRUC's specifications. NRUC approved the drawings and submitted an initial order for 2,160 car sets. The car sets manufactured by Scullin Steel for NRUC were interchangeable with respect to any railway cars having a 70-ton load capacity (which includes 70% of all rolling stock in the United States). Although not specified by NRUC, Scullin Steel decided to manufacture the car sets' parts with holes for dead-lever fulcrum brackets. (Evidently Scullin Steel thought that such a modification would enhance the usefulness of the car sets.) Of the 6,362 car sets referred to in the amended sales agreement, 87 car sets were received and accepted by NRUC. The invoice price of the 87 car sets was $109,642.53, which NRUC refused to pay. NRUC also returned parts to Scullin Steel which, less scrap value, were invoiced at $294,489.22. Scullin Steel had also manufactured other parts pursuant to the sales agreement which had an invoice price of $71,438.20. NRUC did not place any additional orders.

Scullin Steel participated in a series of meetings in early 1980 with NRUC during which the parties discussed Scullin Steel's claims. NRUC was in great financial difficulties at this time and in June 1980 submitted a plan of reorganization. This evidently did not resolve the controversy and in late June 1980 Scullin Steel filed this complaint in federal district court, alleging breach of contract and wrongful refusal to settle and claiming actual damages, lost profits and punitive damages. The basis for subject matter jurisdiction was diversity of citizenship, 28 U.S.C. § 1332. Service of process was made on NRUC in Philadelphia pursuant to the Missouri long-arm statute, Mo.Rev.Stat. § 506.500 (1978). ² NRUC filed a motion to quash service of process and to dismiss for lack of personal jurisdiction and failure to state a claim (on Count III, the claim for wrongful refusal to settle). The district court granted the motion to dismiss, finding that Scullin Steel failed to make a prima facie showing of jurisdictional facts. This appeal followed.

For reversal Scullin Steel argues that the reach of Missouri's long-arm statute is coextensive with that of due process and that NRUC's contacts with Missouri satisfy the state statutory requirement of "transacting business" and the due process requirement of "minimum contacts." See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). NRUC argues that it has not transacted any business in Missouri in connection with Scullin Steel's cause of action and that its contacts with Missouri do not satisfy the due process requirement of minimum contacts.

While the facts adduced in a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction must be viewed in the light most favorable to the party opposing the motion, there must nonetheless be some evidence upon which a prima facie showing of jurisdiction may be found to exist, thereby casting the burden upon the moving party to demonstrate a lack of personal jurisdiction. "Once jurisdiction has been controverted or denied, (the plaintiff has) the burden of proving such facts."

Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir. 1977), citing Block Industries v. DHJ Industries, Inc., 495 F.2d 256, 259 (8th Cir. 1974). "It is by now well-settled that the party seeking to invoke the jurisdiction of a federal court has the burden of establishing that jurisdiction exists, and the burden may not be shifted to the party challenging the jurisdiction." Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 490 (5th Cir. 1974), citing Jetco Electronic Industries, Inc. v. Gardiner, 473 F.2d 1228, 1232 (5th Cir. 1973).

"By virtue of Fed.R.Civ.P. 4(d)(7) & (e), a federal court in a diversity action enjoys jurisdiction over a nonresident defendant to the extent permitted by the long arm statute of the forum state." Prejean v. Sonatrach, Inc., 652 F.2d 1260, 1264 n.2 (5th Cir. 1981); see 4 C. Wright & A. Miller, Federal Practice and Procedure § 1075 (1969). Although the reach of the state long-arm statute is a question of state law and federal courts are required to accept the interpretation given the statute by the state supreme court, the extent to which the reach of the long-arm statute is limited by due process is a question of federal law. E.g., Iowa Electric Light & Power Co. v. Atlas Corp., 603 F.2d 1301, 1303 (8th Cir. 1979), cert. denied, 445 U.S. 911, 100 S.Ct. 1090, 63 L.Ed.2d 327 (1980); Lakeside Bridge & Steel Co. v. Mountain State Construction Co., 597 F.2d 596, 599 (7th Cir. 1979) (Lakeside ), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980). The Missouri Supreme Court has stated that the legislative objective of the long-arm statute was "to extend the jurisdiction of the courts of this state over nonresident defendants to that extent permissible under the Due Process Clause." State ex rel. Deere & Co. v. Pinnell, 454 S.W.2d 889, 892 (Mo.1970) (banc); see also M & D Enterprises, Inc. v. Fournie, 600 S.W.2d 64, 68 (Mo.Ct.App.1980). As explained in State ex rel. Caine v. Richardson, 600 S.W.2d 82, 85 (Mo.Ct.App.1980), "(s)uch a statement, of course means the 'extent permissible' for the act or conduct set forth in the statute, and does not refer to the limits which might be permissible for other conduct not specified in the statute."

Our inquiry is a two-part one: first, whether the facts presented satisfy the statutory requirements, Mo.Rev.Stat. § 506.500, subd. 1, and, second, whether the exercise of personal jurisdiction is consistent with due process. E.g., Hutson v. Fehr Bros., 584 F.2d 833, 835 (8th Cir.) (banc), cert. denied, 439 U.S. 983, 99 S.Ct. 573, 58 L.Ed.2d 654 (1978); Dangerfield v. Bachman Foods, Inc., 515 F.Supp. 1383, 1386 (D.N.D.1981); State ex rel. Caine v. Richardson, 600 S.W.2d at 85 (two-part inquiry); M & D Enterprises, Inc. v. Fournie, 600 S.W.2d at 68 (two-part inquiry).

The Missouri courts have liberally construed the statutory requirement of "transacting any business" within the state for purposes of long-arm jurisdiction. E.g., Wooldridge v. Beech Aircraft Corp., 479 F.Supp. 1041, 1053 (W.D.Mo.1979); J. F. Pritchard & Co. v. Dow Chemical of Canada, Ltd., 331 F.Supp. 1215, 1218 (W.D.Mo.1971) ("transacting any business" concept significantly broader than "doing business" concept), aff'd, 462 F.2d 998 (8th Cir. 1972), citing Scheidegger v. Greene, 451 S.W.2d 135, 138 (Mo.1970); American Hoechst Corp. v. Bandy Laboratories, Inc., 332 F.Supp. 241, 243 (W.D.Mo.1970); State ex rel. Farmland Industries, Inc. v. Elliott, 560 S.W.2d 60, 62-63 (Mo.Ct.App.1977). However, these cases have required some activity, directly or indirectly related to the transaction in question, on the part of the nonresident defendant in Missouri. E.g., American Hoechst Corp. v. Bandy Laboratories, Inc., 332 F.Supp. at 243 (...