Digi-Tel Holdings, Inc. v. Proteq Telecommunications (PTE), Ltd.

Citation89 F.3d 519
Decision Date11 July 1996
Docket NumberDIGI-TEL,No. 95-2853,95-2853
PartiesHOLDINGS, INC., Appellant, v. PROTEQ TELECOMMUNICATIONS (PTE), LTD., Appellee. Brustuen International, Inc., Intervenor.
CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)

David R. Marshall, Minneapolis, MN, argued (Terri A. Georgen, on the brief), for appellant.

Duane W. Krohnke, Minneapolis, MN, argued (Gregory Schaefer, Sidney Spaeth and Robert Magill, on the brief), for appellee.

Before FAGG, BRIGHT, and WOLLMAN, Circuit Judges.

BRIGHT, Circuit Judge.

Digi-Tel Holdings, Inc. (Digi-Tel) appeals the order of the district court 1 dismissing its breach of contract and fraud claims against Proteq Telecommunications (PTE), Ltd. (Proteq) for lack of personal jurisdiction. The district court held that the exercise of personal jurisdiction over Proteq, a Singapore company, was not consistent with due process because Proteq did not have sufficient "minimum contacts" with the State of Minnesota. We affirm.

I. BACKGROUND

Proteq, a Singapore company, is a wholly-owned subsidiary of Proteq Technologies PTE, Ltd., a Singapore company, which in turn is a wholly-owned subsidiary of Goldtron, Ltd., also a Singapore company. Since its incorporation on July 16, 1992, Proteq's business has been the research and development of telecommunication products. Proteq does not maintain any offices, have any employees, or own any property in Minnesota. There is no evidence that Proteq has ever solicited business or advertised in Minnesota. Proteq is not licensed to do business in Minnesota and has no personnel or agents authorized to accept process within Minnesota.

Major Computer Incorporated (Major), a Minnesota corporation, enlisted the assistance of Brustuen International, Inc., a Minnesota-based international trade consulting firm, in an effort to locate a manufacturing source of cellular telephones. As a result of these efforts, in the summer of 1992, Major entered into an agreement to purchase up to 240,000 cellular phones from Proteq. There were seven face-to-face meetings between Proteq and Major regarding developing and selling the cellular phones, all of which took place in Singapore. On one of these occasions, Major's Vice President obtained a sample cellular phone, and Proteq sent four additional samples to Major in Minnesota. The parties exchanged dozens of letters and faxes and numerous phone calls in connection with the sales agreement.

The Proteq/Major agreement provided that the agreement would be construed and governed by Minnesota law. Under the terms of the contract, Major would assume control of the phones while they were still in Singapore. The sales agreement provided the price as "F.O.B. Singapore." Delivery of the phones was expected to begin sometime late in 1992. The duration of the contract was the later of two years or 240,000 units. In addition, Major had the option to renew under certain conditions.

Proteq encouraged Major to re-sell the phones to Major's customers before they were manufactured. Less than one month after signing its agreement with Proteq, Major contracted to sell these same cellular phones to Digi-Tel.

In December of 1992, Goldtron (the parent company of Proteq) applied to the Minnesota Secretary of State for registration of the trademark "Goldtron." Goldtron obtained a "Certificate of Registration of Mark." 2 The application extended to a range of products including cellular phones and audio and security equipment. Proteq mailed a copy of the trademark certificate to Major shortly after the certificate was obtained. The sample phone which Proteq had sent to Major in July of 1992 bore the mark "Goldtron", and Proteq admits that it considered using "Goldtron" as the trademark on the phone.

Proteq never delivered cellular phones to Major, and Major was unable to fulfill its agreement with Digi-Tel. Digi-Tel filed suit against Major for breach of the Major/Digi-Tel agreement. Major subsequently experienced financial difficulties which resulted in Major's secured creditor foreclosing on its assets.

In December of 1993, an employee of Goldtron and an employee of a Hong Kong subsidiary of Goldtron traveled to Minnesota to meet with representatives of Digi-Tel. At the meeting they discussed the possibility of enlisting Digi-Tel to help in obtaining FCC approval of a cellular phone and for marketing and distributing the phone. The phone was a different model than that envisioned under the Proteq/Major agreement. They delivered samples of the phone to the Digi-Tel representatives. They also offered Digi-Tel $100,000 to resolve Digi-Tel's claims against Proteq. 3 Digi-Tel declined the offer.

Digi-Tel subsequently filed suit against Proteq for fraud and breach of contract. Digi-Tel acquired Major's interest in the Proteq/Major agreement from Major's secured creditor. Digi-Tel commenced the action against Proteq as a third-party beneficiary of the Major/Proteq agreement and as the assignee of Major's rights under that agreement. Digi-Tel served Proteq under Minnesota long-arm statute § 303.13. Following a hearing on June 30, 1995, at which no live testimony was presented, the district court granted Proteq's motion to dismiss for lack of personal jurisdiction. The district court determined that the exercise of personal jurisdiction over Proteq would violate due process because Proteq lacked sufficient minimum contacts with the State of Minnesota. Digi-Tel appealed.

II. DISCUSSION

To survive a motion to dismiss for lack of personal jurisdiction, the plaintiff need only make a prima facie showing of personal jurisdiction over the defendant. Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1387 (8th Cir.1995); Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir.1994); Watlow Elec. Mfg. Co. v. Patch Rubber Co., 838 F.2d 999, 1000 (8th Cir.1988). For the purposes of a prima facie showing, the court must view the evidence in the light most favorable to the plaintiff and resolve all factual conflicts in the plaintiff's favor. Dakota Indus., Inc. v. Dakota Sportswear, Inc., 946 F.2d 1384, 1387 (8th Cir.1991). We review de novo whether the plaintiff has presented a prima facie case of personal jurisdiction. Bell Paper Box, Inc. v. Trans Western Polymers, Inc., 53 F.3d 920, 921 (8th Cir.1995); Northrup King, 51 F.3d at 1387.

In deciding whether a court has personal jurisdiction over a non-resident defendant, this court is guided by two primary rules. First, the facts presented must satisfy the requirements of the forum state's long-arm statute. Second, the exercise of personal jurisdiction over the defendant must not violate due process. Northrup King, 51 F.3d at 1387. Because the district court concluded that due process would be violated if personal jurisdiction were conferred over Proteq, it did not reach the issue of whether or not the requirements of the Minnesota long-arm statute were met.

Due process mandates that jurisdiction be exercised only if defendant has sufficient "minimum contacts" with the forum state, such that summoning the defendant to the forum state would 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) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940)). To maintain personal jurisdiction, defendant's contacts with the forum state must be more than "random," "fortuitous," or "attenuated." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). Sufficient contacts exist when "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). In assessing the defendant's reasonable anticipation, there must be " 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.' " Burger King, 471 U.S. at 475, 105 S.Ct. at 2183 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958)). Jurisdiction is proper where the contacts proximately result from actions by the defendant itself that create a "substantial connection" with the forum State. Id.

In conjunction with these basic principles of due process, this court applies a five-factor test in analyzing the constitutional requirements needed for personal jurisdiction: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum; (3) the relation of the cause of action to these contacts 4; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties. Wessels, Arnold & Henderson v. Nat'l Medical Waste, Inc., 65 F.3d 1427, 1432 (8th Cir.1995); Trans Western Polymers, 53 F.3d at 922; Aaron Ferer & Sons Co. v. Diversified Metals Corp., 564 F.2d 1211, 1215 (8th Cir.1977). The first three factors are of primary importance, and the last two are "secondary factors." Minnesota Min. and Mfg. Co. v. Nippon Carbide Indus. Co., 63 F.3d 694, 697 (8th Cir.1995), cert. denied, --- U.S. ----, 116 S.Ct. 1288, 134 L.Ed.2d 232 (1996); Northrup King, 51 F.3d at 1388. Because the first three factors are closely interrelated, we consider them together.

Digi-Tel has established the existence of certain contacts between Proteq and the forum. First, Proteq sent numerous letters and faxes and made several telephone calls to Minnesota in connection with the Proteq/Major contract. Second, the contract contains a Minnesota choice-of-law provision. Although letters and faxes may be used to support the exercise of personal jurisdiction, they do not themselves establish jurisdiction. Wessels,...

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