743 F.2d 1325 (9th Cir. 1984), 83-2643, Gates Learjet Corp. v. Jensen

Docket Nº:83-2643.
Citation:743 F.2d 1325
Party Name:GATES LEARJET CORPORATION and Gates Learjet Export Corporation, Plaintiffs/Appellants, v. James B. JENSEN, Jr.; Ricardo S. Tomacruz; Learjet Philippines, Inc., a corporation; James B. Jensen & Co., Inc., a corporation, and Hamix International, Ltd., a corporation, Defendants/Appellees.
Case Date:September 27, 1984
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1325

743 F.2d 1325 (9th Cir. 1984)


Corporation, Plaintiffs/Appellants,


James B. JENSEN, Jr.; Ricardo S. Tomacruz; Learjet

Philippines, Inc., a corporation; James B. Jensen

& Co., Inc., a corporation, and Hamix

International, Ltd., a



No. 83-2643.

United States Court of Appeals, Ninth Circuit

September 27, 1984

Argued and Submitted May 14, 1984.

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[Copyrighted Material Omitted]

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[Copyrighted Material Omitted]

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William H. Tinney, Michael J. Rusing, Bilby, Shoenhair, Warnock & Dolph, Tucson, Ariz., for plaintiffs-appellants.

D. Michael Mandig, John F. Molloy, Molloy, Jones, Donahue, Trachta, Childers & Mallamo, P.C., Tucson, Ariz., for defendants-appellees.

Appeal from the United States District Court for the District of Arizona.

Before CHOY, PREGERSON and REINHARDT, Circuit Judges.

CHOY, Circuit Judge:

The issues on this appeal are (1) whether the district court properly dismissed counts two and three of appellant's complaint for lack of personal jurisdiction, and (2) whether the district court's dismissal of counts one and four for forum non conveniens was an abuse of discretion. On both issues, we reverse and remand to the district court.


Gates Learjet Corporation and Gates Learjet Export Corporation ("Gates") entered into an international distributorship agreement with Learjet Philippines, Inc. ("LPI") in 1978. Gates, principally located in Tucson, Arizona, manufactures executive aircraft known as Learjets. LPI is a Philippine corporation. The original agreement was for a period of one year but was renewed for an additional two years and four months.

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James B. Jensen, Jr., a United States citizen with residence in California and the Philippines, is the president of LPI and James B. Jensen & Co. ("Jensen, Inc."), a California corporation located in San Francisco. The negotiations for the international distributorship agreement occurred both in Tucson, when Jensen visited Gates, and by telephone, correspondence, and telex from Tucson to Manila and San Francisco. The agreement provides that it "is an Arizona agreement and that it shall be governed by the laws of the State of Arizona of the United States of America in all matters, included but not limited to, validity, obligation, interpretation, construction, performance and termination."

During the time the agreement was in effect, Jensen and Ricardo S. Tomacruz, the vice-president and general manager of LPI and a citizen and resident of the Philippines, made several trips to Tucson on behalf of LPI. The purposes of Jensen's visits, which numbered at least seven between February 1978 and September 1981, included arrangement of an aircraft sale, meetings with Gates' employees, and attendance at Gates' international distributor conference and the delivery of several airplanes. LPI also entered into several airplane purchase agreements with Gates in Tucson. Each agreement contained a choice of law provision specifying Arizona and a choice of forum provision that the "courts of Arizona shall have exclusive jurisdiction to hear and determine all claims, disputes, actions, or suits which may arise hereunder." In addition, LPI and Jensen, Inc. purchased over $200,000 in spare parts from Gates.

In 1981, Gates did not renew the international distributorship agreement with LPI. On February 3, 1982, Gates filed a four-count complaint in an Arizona state court against Jensen, Tomacruz, LPI, Jensen, Inc., and Hamix International Ltd., a Hong Kong corporation ("defendants"). Count one of the complaint alleges unauthorized use of Gates' tradenames and trademarks. Count two alleges abuse of process arising out of the seizure by Philippine authorities of a Gates' aircraft and the jailing of its pilot. Count three alleges interference with contractual relations between Gates and customers in the Philippines. Count four alleges a conspiracy to make unauthorized use of Gates' tradename and trademark. The action was removed to a federal district court for diversity of citizenship.

On September 23, 1982, the United States District Court for the District of Arizona dismissed counts two and three for lack of personal jurisdiction as to one of the defendants, Jensen, Inc. Gates Learjet Corp. v. Jensen, No. CIV 82-139 (D.Ariz. Sept. 23, 1982) (Gates Learjet I ). After this partial dismissal, the defendants answered the complaint and filed a six-count counterclaim. The counterclaim alleges improper termination of the distributorship agreement, unjust enrichment, interference with contractual relations, and defamation. It added three parties to the litigation: B.S. Stillwell, Jane Doe Stillwell, and Stillwell Aviation Australia Party, Ltd. On May 31, 1983, the district court clarified its earlier dismissal order and dismissed counts two and three as to all of the defendants.

On October 5, 1983, after 18 months of trial preparation, the defendants challenged the convenience of the forum. The defendants allege that two civil actions pending in Philippine courts make the same allegations as the action brought by Gates in Arizona. On November 1, 1983, the district court conditionally dismissed counts one and four of the complaint under the doctrine of forum non conveniens. The court dismissed Gates' complaint on the following conditions: 1) The Philippine courts accept jurisdiction; 2) the defendants submit to that jurisdiction; 3) the defendants make their employees available for process and as witnesses; 4) the defendants waive any newly arisen statute of limitations defenses; 5) the defendants recognize any Philippine court judgment; and 6) all discovery and products may be used in any action in the Philippines, subject to objections which could be made in this court. Gates Learjet Corp. v. Jensen, No. CIV 82-139, slip op. at 11 (D.Ariz. Nov. 1, 1983) (Gates Learjet II ).

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  1. Personal Jurisdiction

    The district court dismissed counts two and three of Gates' complaint for lack of personal jurisdiction. As the party seeking to invoke the jurisdiction of the court, Gates has the burden of establishing personal jurisdiction. Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 (9th Cir.1977). 1 Arizona's long-arm statute establishes personal jurisdiction over nonresidents to the maximum extent permitted by due process. Houghton v. Piper Aircraft Corp., 112 Ariz. 365, 542 P.2d 24, 26 (1975). Due process requires the defendants to have certain minimum contacts with the forum so that maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945); Colonial Leasing Co. v. Pugh Brothers Garage, 735 F.2d 380, 383 (9th Cir.1984). To satisfy this due process requirement, Gates may prove "general jurisdiction" or "limited jurisdiction."

    1. General Jurisdiction

      A sufficient relationship between the defendants and Arizona exists to support general jurisdiction if Gates can demonstrate that the defendants' activities within Arizona are "substantial" or "continuous and systematic." See Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d at 1287. We review the district court's holding that Jensen "does not transact business within Arizona on a continuous or systematic basis, and does not provide the kind of contacts that would sustain exercise of general jurisdiction." Gates Learjet I, slip op. at 7.

      Gates cites five activities to prove that defendants' contacts with Arizona were "continuous and systematic" and "substantial": 1) Jensen solicited the distributorship agreement in Arizona; 2) the defendants visited Tucson a number of times; 3) the airplane purchase agreements between Gates and Jensen contained an Arizona choice of law and forum provision; 4) the defendants purchased spare parts from Gates in Tucson; and 5) the defendants sent many letters and telexes and made numerous telephone calls to Tucson.

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      We must decide whether these contacts constitute sufficient activity in Arizona to conclude that the defendants "may in fact be said already to be 'present' there." Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 413 (9th Cir.1977). Moreover, we must focus upon the "economic reality" of the defendants' activities rather than a mechanical checklist. See Thos. P. Gonzalez Corp. v. Consejo Nacional, 614 F.2d 1247, 1254 (9th Cir.1980) (quotingFoster v. Mooney Aircraft Corp., 68 Cal.App.3d 887, 137 Cal.Rptr. 694, 697 (1977)).

      We conclude that the "economic reality" here is that defendants' activities in Arizona were not "continuous and systematic" or "substantial". Jensen's solicitation of the distributorship agreement in Arizona and the defendants' visits to Tucson do not constitute "conducting business" in Arizona. See Rocke v. Canadian Automobile Sport Club, 660 F.2d 395, 399 (9th Cir.1981). Making telephone calls and sending telexes and letters to Tucson are not activities which support a finding of general jurisdiction. See Thos. P. Gonzalez Corp. v. Consejo Nacional, 614 F.2d at 1254. Furthermore, the choice of forum provision in the airplane purchase agreement applies only to disputes arising out of those agreements. Significantly, the defendants did not establish a regular place of business in Arizona. See Rocke v. Canadian Automobile Sport Club, 660 F.2d at 399. These contacts in their totality do not demonstrate sufficient activity in Arizona to support general jurisdiction. Defendants' activities in Arizona were more occasional than continuous, and more infrequent than systematic.

    2. Limited Jurisdiction

      If a defendant's activities are not so pervasive to subject them to general jurisdiction, this court makes the following evaluation in...

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