C.W. Downer & Co. v. Bioriginal Food & Sci. Corp.

Decision Date12 November 2014
Docket NumberNo. 14–1327.,14–1327.
Citation771 F.3d 59
PartiesC.W. DOWNER & COMPANY, Plaintiff, Appellant, v. BIORIGINAL FOOD & SCIENCE CORPORATION, Defendant, Appellee.
CourtU.S. Court of Appeals — First Circuit

771 F.3d 59

C.W. DOWNER & COMPANY, Plaintiff, Appellant,
v.
BIORIGINAL FOOD & SCIENCE CORPORATION, Defendant, Appellee.

No. 14–1327.

United States Court of Appeals,
First Circuit.

Nov. 12, 2014.


[771 F.3d 62]


Steven J. Torres, with whom Kate S. Swartz and Torres Scammon & Day LLP were on brief, for appellant.

Alan D. Rose, Jr., with whom R. Victoria Fuller and Rose, Chinitz & Rose were on brief, for appellee.


Before LYNCH, Chief Judge, STAHL and BARRON, Circuit Judges.

LYNCH, Chief Judge.

The Due Process Clause of the Fourteenth Amendment allows a state's courts to exercise jurisdiction over a nonresident defendant only when doing so “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) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). This contract case presents these issues where the

[771 F.3d 63]

parties' contacts were not first-hand and involved no physical presence in Massachusetts, but were by phone, e-mail, and internet over an international border. The district court concluded that it could not exercise personal jurisdiction over the defendant consistently with the Due Process Clause. C.W. Downer & Co. v. Bioriginal Food & Sci. Corp., No. 13–11788–DJC, 2014 WL 815189 (D.Mass. Mar. 3, 2014). We conclude to the contrary that the Massachusetts courts do have long-arm jurisdiction over the Canadian defendant.

In 2009, the defendant Bioriginal Food & Science Corporation, a Canadian company, contracted with C.W. Downer & Co., a Massachusetts investment bank, to be its exclusive financial advisor for the sale of its business. The parties negotiated and executed the agreement remotely, and subsequently spent four years collaborating from their respective home offices. Downer later sued in state court in Massachusetts for breach of contract, and Bioriginal removed the case to federal court. The district court dismissed for lack of personal jurisdiction. In light of the nature, the number of contacts over time, the origin, and the duration of the parties' contacts, we hold that the exercise of long-arm jurisdiction by Massachusetts is consistent with fair play and substantial justice. We reverse and remand.

I.

Downer is a global investment bank founded and headquartered in Boston, Massachusetts. Twenty-three of its seventy-five employees work in Boston. Bioriginal is a Canadian corporation that produces omega-based nutritional supplements, and is headquartered in Saskatoon, Saskatchewan.

In September 2008, Christopher Johnson visited Boston. Johnson was an employee of Bioriginal investor Crown Capital and sat on Bioriginal's Board of Directors as its de facto chairman. While in Boston, Johnson met with Downer in Downer's headquarters. The purpose of the meeting is not in evidence. However, Johnson “indicated” to Downer while meeting there that Bioriginal “would be offered for sale in the next twelve months.” The record does not reveal whether Johnson explicitly approached Downer on behalf of Bioriginal.

After the meeting, Downer contacted Bioriginal, referencing Johnson's visit. Bioriginal (including Johnson and CEO Joseph Vidal) and representatives from Downer's Boston office remotely negotiated by calls, e-mails, and teleconferences a Letter Agreement under which Bioriginal hired Downer to assist in the sale of Bioriginal. On March 16, 2009, Vidal transmitted his signed copy of the agreement, dated March 12, to Downer in Boston. There was never a physical meeting of the contracting parties.

Under the terms of the Letter Agreement, Downer acted as Bioriginal's exclusive financial adviser in connection with the potential sale of Bioriginal. The agreement provided it could be terminated by either party with thirty days written notice. According to Downer, neither side ever provided such written notice. The agreement also contained a choice-of-law provision in favor of Saskatchewan law and consent by both parties to jurisdiction in Saskatchewan courts, but it did not, by its terms, preclude suit in Massachusetts.

Bioriginal agreed to pay Downer four “Milestone Payments” of $20,000 when specified tasks were completed, three of which it subsequently made to Downer in Massachusetts. Bioriginal also agreed to pay Downer another contingent fee for

[771 F.3d 64]

each completed transaction involving Bioriginal and another company “prior to the termination of this program.” The contingent transaction fee stated is the greater of $420,000 or $200,000 plus one to five percent of the transaction value (depending on the size of the transaction). All paid Milestone Payments were to be deducted from this contingent fee for the completion of a transaction, so long as the resulting amount was not less than a specified value.

Three members of Downer's Boston office handled Downer's performance under the contract. (Downer has no other North American offices.) They communicated regularly but remotely with Vidal, Johnson, and other members of Bioriginal's management team and Board. From April to July 2009, Downer prepared a detailed Information Memorandum which the parties exchanged with comments eleven times. Downer regularly received input from Vidal by teleconferences and e-mail, including an e-mail from Vidal to Downer collecting comments from Bioriginal board members. By September 2009, Downer had contacted 206 potential buyers and received four bids, keeping Vidal “abreast of its efforts” all the while. Downer then worked with Bioriginal's management and a subcommittee of the Board to prepare a joint management presentation for select bidders. Bioriginal gave input even at the level of preparing individual slides of the presentation.

Though no sale of Bioriginal was made in 2009 or 2010, Downer continued to work on getting Bioriginal a deal. From February 2011, Downer contacted potential suitors and exchanged information with Bioriginal before delivering an “M & A Update” document on May 2, 2011, at Bioriginal's request. Downer persisted in its efforts to secure a buyer. Downer says in September 2011 it identified a private equity group as a potential buyer and informed Bioriginal. Downer then hosted a conference call the next month, October 2011, for Bioriginal and the private equity group to explore an acquisition of Bioriginal. The potential sale never took place. Downer claims that its personnel remained in contact with Bioriginal through 2013. Downer's managing director asserted in his affidavit that there were periodic phone calls and e-mails with Vidal.

Sometime in the spring of 2013, Downer learned that Bioriginal had been sold to Westbridge Capital, Ltd.1 Downer asked Biorignial to pay its transaction fee and the fourth Milestone Payment, but Bioriginal refused. Downer states that Bioriginal has asserted that it had terminated the agreement earlier, perhaps in 2009. Here, Bioriginal seems to ground its merits defense on the argument that Downer was not involved in the sale of Bioriginal to Westbridge.

On July 1, 2013, Downer sued Bioriginal in Massachusetts Superior Court claiming breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, and violation of the Massachusetts unfair trade practices statute, Mass. Gen. Laws ch. 93A. Bioriginal removed the case to federal district court in Massachusetts on July 26. On August 16, Bioriginal moved to dismiss, arguing that the court lacked personal jurisdiction over Bioriginal, that a forum non conveniens dismissal was appropriate in favor of Saskatchewan court, and that Downer's 93A claim should be dismissed for failure to state a claim.

[771 F.3d 65]

The district court allowed the motion to dismiss for lack of jurisdiction under Rule 12(b)(2), did not reach the forum non conveniens issue, and denied as moot the 12(b)(6) motion to dismiss the 93A claim. This appeal followed.

II.

Where, as here, a district court dismisses a case for lack of personal jurisdiction based on the prima facie record, rather than after an evidentiary hearing or factual findings, our review is de novo. E.g., Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir.2008). In reviewing the facts, we take the plaintiff's evidentiary proffers as true and construe them in the light most favorable to the plaintiff's claim, and we also consider uncontradicted facts proffered by the defendant. Daynard v. Ness, Motley, Loadholt, Richardson, & Poole, P.A., 290 F.3d 42, 51 (1st Cir.2002).

To establish personal jurisdiction in a diversity case, a plaintiff must satisfy both the forum state's long-arm statute and the Due Process Clause of the Fourteenth Amendment. Ticketmaster–New York, Inc. v. Alioto, 26 F.3d 201, 204 (1st Cir.1994). The district court and the parties each proceed directly to the constitutional analysis, and we will do so as well.

Downer asserts only that Massachusetts has specific in personam jurisdiction over Bioriginal, not general jurisdiction. That is, the jurisdictional basis for Downer's suit arises from and is limited to Bioriginal's suit-related conduct. See Walden v. Fiore, ––– U.S. ––––, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014). To evaluate whether Bioriginal's suit-related conduct creates the necessary minimum contacts with Massachusetts, courts consider (1) whether the claim “directly arise[s] out of, or relate[s] to, the defendant's forum state activities;” (2) whether the defendant's in-state contacts “represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable;” and (3) whether the exercise of jurisdiction is reasonable. Daynard, 290 F.3d at 60–61 (quoting Foster–Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 144 (1st Cir.1995)) (internal quotation marks omitted).

There is one fact about this case which has...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT