Control Screening LLC v. Tech. Application & Prod. Co. (Tecapro), HCMC–Vietnam

• Decision Date: 26 July 2012
• Docket Number: No. 11–2896.,11–2896.
• Citation: 687 F.3d 163
• Parties: CONTROL SCREENING LLC v. TECHNOLOGICAL APPLICATION AND PRODUCTION COMPANY (TECAPRO), HCMC–VIETNAM, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

687 F.3d 163

CONTROL SCREENING LLC

v.TECHNOLOGICAL APPLICATION AND PRODUCTION COMPANY (TECAPRO), HCMC–VIETNAM, Appellant.

No. 11–2896.

United States Court of Appeals, Third Circuit.

Argued May 7, 2012.

Opinion filed July 26, 2012.

Lauren E. Komsa (Argued), Anthony J. Pruzinsky, Hill Rivkins, New York, NY, for Appellant.

Donald P. Jacobs (Argued), Budd Larner, Short Hills, NJ, for Appellee.

Before: SLOVITER, ROTH, Circuit Judges, and POLLAK, District Judge. ^*

OPINION OF THE COURT

SLOVITER, Circuit Judge.

This dispute involves New Jersey-based Control Screening, LLC and Vietnam-based Technological Application and Production Company, HCMC–Vietnam (“Tecapro”). Control Screening and Tecapro disagree about the proper interpretation of an arbitration forum selection clause in their contract. The District Court granted Control Screening's motion and petition to compel arbitration in New Jersey, and Tecapro appealed.

I.

Control Screening manufactures and sells X-ray and metal detection devices for use in public facilities around the world. Tecapro is a private, state-owned company that was formed by the Vietnamese government for the purpose of introducing advanced technologies into the Vietnamese market.

In April 2010, Tecapro entered into a contract with Control Screening for the purchase of twenty-eight customized AutoClear X-ray machines with a total purchase price of $1,021,156. Each party now alleges that the other party has breached its obligations under the contract. The contract provides that:

In the event all disputes are not resolved, the disputes shall be settled at International Arbitration Center of European countries for claim in the suing party's country under the rule of the Center. Decision of arbitration shall be final and binding [sic] both parties.

App. at 51. Tecapro initiated arbitration proceedings in Belgium under the Belgian Judicial Code in November 2010. In December 2010, Control Screening notified Tecapro of its intention to commence arbitration proceedings in New Jersey.

In January 2011, Control Screening filed its petition to compel arbitration in the United States District Court for the District of New Jersey. The petition requested that the District Court compel arbitration of all disputed issues in New Jersey, appoint an arbitrator named by Control Screening, designate arbitration rules chosen by Control Screening, enjoin Tecapro from proceeding with arbitration in Belgium, and award attorney's fees and costs to Control Screening. Tecapro opposed the petition, arguing that the contract provided for arbitration in Europe and that, in any event, the District Court lacked personal jurisdiction over it.

The District Court determined that it had subject matter jurisdiction under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”), Sept. 30, 1970, 21 U.S.T. 2517, and that it had personal jurisdiction over Tecapro because, inter alia, the company had “sufficient contacts with New Jersey that relate to and arise out of the 2010 contract.” App. at 6 n. 7.

The Court concluded that “the only reasonable interpretation of the arbitration clause is that Tecapro could have sought to arbitrate in Vietnam and Control Screening in New Jersey. The latter is what happened in this case and therefore the arbitration shall proceed in New Jersey.” App. at 6 n. 8. The District Court therefore granted Control Screening's request to compel arbitration. Tecapro appeals.

II.

Section 16(a)(3) of the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et seq., provides that “[a]n appeal may be taken from ... a final decision with respect to an arbitration that is subject to this title.” Where, as here, “the District Court has ordered the parties to proceed to arbitration, and dismissed all the claims before it, that decision is ‘final’ within the meaning of § 16(a)(3), and therefore appealable.” Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 89, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). Accordingly, under 28 U.S.C. § 1291, this court has jurisdiction to hear Tecapro's appeal.

We review a district court's decision with respect to personal jurisdiction de novo but review factual findings made in the course of determining personal jurisdiction for clear error. See Telcordia Tech Inc. v. Telkom SA Ltd., 458 F.3d 172, 176 (3d Cir.2006). We review questions concerning the applicability and scope of an arbitration agreement de novo. See Kaneff v. Del. Title Loans, Inc., 587 F.3d 616, 620 (3d Cir.2009).

“A district court decides a motion to compel arbitration under the same standard it applies to a motion for summary judgment.” Id. “The party opposing arbitration is given the benefit of all reasonable doubts and inferences that may arise.” Id. (internal quotation marks and citation omitted).

III.

Tecapro argues that the District Court erred by: (1) improperly exercising personal jurisdiction over it; (2) failing to consider Tecapro's facts and evidence; (3) placing the burden of proof on Tecapro rather than Control Screening; (4) refusing to hold an evidentiary hearing; and (5) finding that the parties had agreed to arbitrate in New Jersey rather than in Europe.

A. Personal Jurisdiction

Under New Jersey's analog to a long-arm statute, N.J. Court Rule 4:4–4, a district court may assert personal jurisdiction over nonresidents to the extent permitted by the Due Process Clause of the Fourteenth Amendment. See Telcordia Tech, 458 F.3d at 177. A district court may exercise in personam jurisdiction over a nonresident so long as the defendant has “certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks and citation omitted). “[T]he plaintiff bears the burden to prove, by a preponderance of the evidence, facts sufficient to establish personal jurisdiction.” Carteret Sav. Bank v. Shushan, 954 F.2d 141, 146 (3d Cir.1992).

Personal jurisdiction may be either general or specific. “Specific jurisdiction is established when a non-resident defendant has ‘purposefully directed’ his activities at a resident of the forum and the injury arises from or is related to those activities.” ¹Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir.2001) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). In a contract case, such as this one, Control Screening must establish that Tecapro's contacts with the forum were instrumental in either the formation or the breach of the contract. Gen. Elec. Co., 270 F.3d at 150.

The relationship between Tecapro and Control Screening began in 2006 when Tecapro submitted a purchase order to Control Screening. Vu Khac Tien, then Vice Director of Tecapro, wrote to Control Screening President and CEO Brad Conway “that this will be the first purchase of many....” App. at 303. Vu Khac Tien continued: Tecapro had “devoted six months of effort and expense to promoting Control Screening and AutoClear scanners ... helping to establish your products in our markets.” Id. Vu Khac Tien also noted that Tecapro had sent one of its employeesto a Control Screening factory in New Jersey for training. In closing, Vu Khac Tien stated that Tecapro representatives were “willing to come to New Jersey ASAP if more discussion is needed.” App. at 307.

Only a few months later, Tecapro submitted a second purchase order to Control Screening. Then, in August 2007, Vu Khac Tien informed Control Screening that Tecapro intended to make yet another purchase. Tecapro also ordered individual scanner parts and upgrades from Control Screening in New Jersey on multiple occasions. The relationship between Tecapro and Control Screening flourished until Tecapro, at its request, became the exclusive distributor of Control Screening products in Vietnam in 2009.

In April 2010, Tecapro and Control Screening entered into the contract at issue here. The contract was signed by Conway in New Jersey. Tecapro's application for an irrevocable letter of credit in connection with the April 2010 contract named as payment beneficiary “Control Screening LLC, 2 Gardner Road Fairfield, New Jersey.” App. at 335. Additionally, several of the X-ray scanner components were shipped from Control Screening's products department in New Jersey. Finally, Vu Khac Tien sent at least eleven emails regarding the April 2010 contract to Conway or Control Screening Vice President Ken Voigtland, both of whose offices were located in New Jersey.²

Tecapro relies on this court's decision in Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Products Co., 75 F.3d 147 (3d Cir.1996), to argue that “specific jurisdiction cannot be asserted over a commercial buyer that has only tangential contact with the seller in the seller's state.” Appellant's Br. at 18. In Vetrotex, however, the only contacts between the defendant and the forum state were “some telephone calls and letters.” 75 F.3d at 152. Furthermore, the court in Vetrotex did not consider the parties' prior dealings in its specific jurisdiction analysis because thirteen months had passed between the termination of the parties' previous business relationship and the beginning of the new relationship at issue in that case, and because that previous relationship had been expressly terminated. Id. at 153.

Here, by contrast, Tecapro's contacts with New Jersey were not limited to communications such as “emails, fax and skype,” App. at 6 n. 7, but included the manufacture and assembly of major scanner components as well as the design of scanner software, all in New Jersey. See App. at 317. Additionally, the April 2010 contract marked the continuation of an uninterrupted four year business relationship between Tecapro and Control Screening, culminating in Tecapro becoming the exclusive distributor of Control Screening...