Alexander Proudfoot Co. World Headquarters v. Thayer

• Decision Date: 19 July 1989
• Docket Number: No. 88-5701,88-5701
• Parties: ALEXANDER PROUDFOOT COMPANY WORLD HEADQUARTERS L.P. and APCO, Inc., Plaintiffs-Appellants, v. Dennis C. THAYER, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 912

877 F.2d 912

58 USLW 2085

ALEXANDER PROUDFOOT COMPANY WORLD HEADQUARTERS L.P. and APCO, Inc., Plaintiffs-Appellants, v. Dennis C. THAYER, Defendant-Appellee.

No. 88-5701.

United States Court of Appeals Eleventh Circuit.

July 19, 1989.

George Roberts, Roberts & Reynolds, West Palm Beach, Fla., Edward B. Krugman, Bondurant, Mixson & Elmore, Michael B. Terry, Emmet J. Bondurant, Atlanta, Ga., for plaintiffs-appellants.

Michael R. Alford, Holland & Knight, Marty Steinberg, Miami, Fla., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before VANCE and COX, Circuit Judges, and KING ¹, Chief District Judge.

JAMES LAWRENCE KING, Chief District Judge:

On the footheels of Stewart Organization, Inc. v. Ricoh Corp., 810 F.2d 1066 (11th Cir.1987), aff'd, --- U.S. ----, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988), we return to the "Irrepressible Myth of Erie ² " in the forum selection clause context. We now are faced with a forum selection clause wherein the parties specifically consent to personal jurisdiction in Florida.

The district court found this contractual clause insufficient to confer in personam jurisdiction under the law of the forum state, Florida. The trial court then granted a motion to dismiss for lack of personal jurisdiction, finding that the requirements of the Florida Long-Arm Statute, Fla.Stat.Ann. Sec. 48.193 (West 1969 and Cumm.Ann.Supp.1989) were not satisfied. The appellant now challenges this ruling by arguing that the Erie doctrine required the district court to apply federal law to enforce the personal jurisdiction conferral clause. Although this argument is not persuasive, we reverse and remand because we find that Florida confers jurisdiction over the appellee.

BACKGROUND ³

Alexander Proudfoot Company World Headquarters and APCO, Inc. ("Proudfoot") filed this action to enforce certain provisions of its employment agreement with Dennis C. Thayer ("Thayer"). Proudfoot seeks to enjoin Thayer from competing with Proudfoot, from servicing its clients, and from using confidential information belonging to Proudfoot. Proudfoot also demands that Thayer return to Proudfoot all confidential documents that Thayer retained after his employment terminated.

Proudfoot is a Delaware corporation with its principal offices in Palm Beach County, Florida. Proudfoot is engaged in the business of management consulting. Specifically, Proudfoot designs and installs management and operational skills systems which help businesses increase productivity. Proudfoot maintains that these specially developed systems are confidential information and are Proudfoot's exclusive property.

Proudfoot first employed Thayer in 1973 to assist in the design and installation of the management systems. ⁴ Proudfoot trained Thayer in the various aspects of the consulting business, including the design and installation of management and operational skills systems. Thayer's first position with Proudfoot was as a staff technician in the operations side of the business. At all relevant times, Thayer remained in operations, receiving promotions to installation manager, chief of operations, executive chief of operations, and later director.

The employment agreement at issue is dated January 15, 1987. Proudfoot mailed a copy of the agreement to Thayer's residence in Missouri. Thayer read the agreement and then authorized his wife to sign it for him. Mrs. Thayer then returned the agreement by mail to Proudfoot's offices in Palm Beach County, Florida, where Proudfoot's general manager executed the contract.

The terms of the employment agreement are central to the resolution of this appeal. The agreement prohibits Thayer from accepting employment with a competitor of Proudfoot for two years after the termination of his employment. The agreement also forbids Thayer from using Proudfoot's confidential information. The agreement further provides that upon disassociation, Thayer must return to Proudfoot in Florida all documents and other information in his possession concerning Proudfoot's business or belonging to Proudfoot. In addition, the employment agreement specifically provides that Thayer consents to personal jurisdiction within the state of Florida for any suit arising from a violation of the agreement. ⁵ By executing the agreement, Thayer also apparently agreed that the proper venue for any suit arising out of the agreement would be a Florida court. ⁶

Most of Thayer's contacts with Proudfoot prior to the alleged breach of this employment contract were centered in Palm Beach County, Florida. Proudfoot reassigned Thayer to United States operations in April of 1985. Thayer reported, either by mail or telephone, to his Proudfoot superiors at least on a weekly basis, and sometimes more frequently. ⁷ During 1986 and 1987, Thayer traveled into Florida on at least nine occasions. On a majority of these trips, Thayer engaged in internal Proudfoot administrative matters at Proudfoot's office. On approximately thirty percent of these trips, however, Thayer performed work on behalf of the Proudfoot clients he represented. These clients were not Florida companies, but out-of-state interests who had matters in Florida to which Thayer attended.

Thayer had additional, more minor contacts with Florida. Proudfoot's procedures required him to submit travel vouchers to Proudfoot's offices in Palm Beach County, Florida, on a biweekly basis. This submission procedure was the exclusive method for Thayer to obtain reimbursement for his business travel expenses incurred on behalf of Proudfoot. Proudfoot's travel agency in Florida arranged and paid for all of Thayer's airline tickets used for business travel. Proudfoot also paid the required unemployment and workers' compensation benefits for Thayer.

In May of 1987, Thayer voluntarily resigned from his employment with Proudfoot. Shortly after resigning, Thayer contacted the Institute of Management Resources ("IMR"), a competitor of Proudfoot based in California, concerning possible employment. Thayer began work for IMR in June of 1987, and performed work similar to that which he had performed at Proudfoot.

Proudfoot believed that Thayer's new employment was in violation of the noncompetition covenants in Thayer's employment agreement. Proudfoot also thought that Thayer violated his employment agreement by disclosing or using Proudfoot's confidential information in his employment with IMR. Proudfoot demanded that Thayer return all of Proudfoot's information he had within his possession. When Thayer refused to return this information, Proudfoot filed suit in state court. ⁸

Thayer removed the case to federal court ⁹ and moved to dismiss for lack of personal jurisdiction. Thayer argued that the requirements of Florida's long-arm statute had not been satisfied. Proudfoot opposed the motion by contending that Thayer waived any jurisdictional objections he may have had by consenting to jurisdiction in Florida in the employment agreement.

After considering the argument of counsel, the district court granted the motion to dismiss. The district court both refused to enforce the conferral of personal jurisdiction clause and found that the requirements of Florida's long-arm statute were not satisfied.

DISCUSSION

The appellant argues that the district court improperly applied state law to decide the motion to dismiss. Proudfoot maintains that Erie R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), requires the application of federal law to enforce the conferral of personal jurisdiction clause. We do not agree, but reverse and remand because under the circumstances of this case, Thayer is subject to jurisdiction in Florida.

I. STANDARD OF REVIEW

We review the dismissal of an action for lack of personal jurisdiction under the nondeferential de novo standard. See Ten Mile Industrial Park v. Western Plains Service Corp., 810 F.2d 1518, 1524 (10th Cir.1987); Dandlea v. Malsbary Mfg. Co., 839 F.2d 163, 166 (3d Cir.1988). The determination of personal jurisdiction involves an application of the law to the facts as set forth in the affidavits and complaint. Ten Mile Industrial Park, 810 F.2d at 1524. The appellate court, in reviewing the documentary evidence presented, is in as good a position as the district court to determine the existence of personal jurisdiction. Id. Our review, therefore, is plenary.

II. THE APPLICATION OF THE ERIE DOCTRINE

We start our de novo review with the Erie doctrine. Almost every time a federal court sitting in diversity decides a matter, Erie concerns are implicated. In today's world of well-developed federal and state law, both state and federal law often provide a means to resolve a legal issue in dispute. Consistent with the principles the Supreme Court espoused in Erie, a federal court must determine whether to apply federal or state law to settle the disputed issue. The question of which law to apply is a "sticky" one, see Stewart Org., Inc. v. Ricoh Corp., 779 F.2d 643, 645 (11th Cir.), vacated, 785 F.2d 896 (11th Cir.1986), and is best understood by examining Erie and its progeny.

Erie eliminated the existence of independent federal common law in diversity cases by overruling Swift v. Tyson, 41 U.S. (16 Pet.) 1, 10 L.Ed. 865 (1842). The Court denounced Swift as an improper assumption by the federal courts of a power "to declare rules of decision which Congress was confessedly without power to enact as statutes." Erie, 304 U.S. at 72, 58 S.Ct. at 819. Justice Brandeis believed the principles espoused in Swift "invaded" rights the Constitution reserved for the several states. Id. at 80, 58 S.Ct. at 823. Moreover, the Court was concerned that Swift allowed forum shopping. Id. at 75, 58 S.Ct. at 820. By deciding that a federal court sitting in diversity must apply the law of the state in which it sits, the Court in Erie primarily sought to discourage forum shopping by having federal decisions mirror...