Benton v. Cameco Corp., No. 02-1548.

• Decision Date: 23 July 2004
• Docket Number: No. 02-1548.
• Citation: 375 F.3d 1070
• Parties: Oren L. BENTON, Appellant-Plaintiff, v. CAMECO CORPORATION, a Canadian corporation, Appellee-Defendant.
• Court: U.S. Court of Appeals — Tenth Circuit

375 F.3d 1070

Oren L. BENTON, Appellant-Plaintiff, v. CAMECO CORPORATION, a Canadian corporation, Appellee-Defendant.

No. 02-1548.

United States Court of Appeals, Tenth Circuit.

July 23, 2004.

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G. Stephen Long (Jennifer A. Schaffner with him on the briefs), of Shughart Thomson & Kilroy, P.C., Denver, Colorado, and William E. Quirk of Shughart Thomson & Kilroy, P.C., Kansas City, MO, for Appellant-Plaintiff.

Daniel F. Wake (Jay S. Horowitz with him on the briefs), of Horowitz & Wake, Denver, CO, for Appellee-Defendant.

Before HENRY, HOLLOWAY, and ANDERSON, Circuit Judges.

HENRY, Circuit Judge.

This case arises from a contract dispute between a Colorado resident, the plaintiff Oren L. Benton, and a Canadian company, the defendant Cameco Corporation. Mr. Benton and Cameco entered into a Memorandum of Understanding in which Mr. Benton agreed to purchase uranium from Cameco for resale. The agreement also set forth the key terms of a planned joint venture to conduct uranium trading activities. When Cameco's board did not approve the transactions contemplated by the Memorandum of Understanding, Mr. Benton sued Cameco in federal district court in Colorado, asserting claims for breach of contract and tortious interference with existing and prospective business relationships. The district court granted Cameco's motion to dismiss on the grounds that Cameco did not have sufficient contacts with Colorado to allow the court to exercise personal jurisdiction over Cameco. Mr. Benton appealed. Because we agree with the district court that personal jurisdiction is inappropriate in this case, we AFFIRM.

I. BACKGROUND

Mr. Benton is a Colorado resident who has been engaged in the business of mining, milling, brokering, and trading uranium for many years. Cameco is a Saskatchewan company organized under the Canada Business Corporations Act with its principal offices in Saskatchewan.

Between 1988 and 1996, Mr. Benton's NUEXCO Trading Company ("NTC") and Cameco entered into a series of approximately two dozen transactions concerning the sale of uranium. These transactions typically consisted of Cameco selling uranium to NTC, buying uranium from NTC, or swapping its uranium for a like amount of NTC's uranium. The transactions were "spot market" transactions, meaning that "each transaction involved separate, independent contractual negotiations, as opposed to a series of sales or trades pursuant to a single, longer term contract." Aplt's Br. at 5-6 n. 2. Such transactions were made in the ordinary course of business and did not require the approval of Cameco's Board of Directors.

In November 1994, Mr. Benton and Cameco entered into the Memorandum of Understanding ("MOU"), the document at issue in this case. The MOU describes two separate transactions between Mr. Benton and Cameco. First, Cameco would provide Mr. Benton's affiliates with quantities of uranium to satisfy Mr. Benton's sales commitments to eighteen different utility companies around the world. Second, the MOU provided for the creation of a joint venture pursuant to which the parties, under Cameco's control, would conduct future uranium trading activities.

The MOU conditioned the agreement to pursue these transactions upon several factors, including (a) a satisfactory due diligence review by Cameco of Mr. Benton's eighteen purported uranium sales contracts and (b) the approval of Cameco's Board of Directors. See Aplt's App. at 133-134(MOU).

After the MOU was signed, members of Cameco's staff spent two days in Colorado conducting the due diligence review of Mr. Benton's eighteen supply contracts. In December 1994, Cameco's Board of Directors met and declined to approve any of the transactions listed in the MOU.

In November 2000, Mr. Benton filed this case against Cameco in federal district court in Colorado, alleging breach of contract and tortious interference with existing and prospective business relationships. Cameco filed a motion to dismiss, arguing, inter alia, that the district court lacked personal jurisdiction over Cameco. The district court agreed, reasoning that Cameco had not established minimum contacts with Colorado because (1) Cameco's contract negotiations with Mr. Benton, a Colorado resident, were insufficient to create minimum contacts with Colorado; (2) under 16 proposed sales contracts, delivery of uranium products would not take place in Colorado, as there are no uranium processing facilities there; (3) Cameco's staff's brief visit to Colorado was insufficient to establish minimum contacts with Colorado; (4) the existence of a Colorado subsidiary of Cameco did not establish the necessary minimum contacts as the subsidiary was not an alter-ego of Cameco; and (5) it would be unfair to require a foreign corporation to defend this case in Colorado.

In addition, the district court stated that "[a]lthough it is technically unnecessary and possibly inappropriate for the Court to consider the merits of the claims where it has found that it lacks jurisdiction ... it [felt] compelled to do so." Aplt's App. at 191-92 (Dist. Ct. Order, filed Nov. 15, 2002). On the merits, the court concluded that Mr. Benton had failed to state either a breach of contract or a tort claim. On the contract claim, the district court found that because "Benton's complaint concede[d] that the MOU expressly condition[ed] the existence of [the] potential transactions upon certain occurrences or performance" and because Mr. Benton affirmatively alleged that one of these conditions, the approval of the Cameco board of directors, did not occur, "there could be no contract to breach." Id. at 192-93. As to the tort claim, the district court found that "Cameco's directors were entitled if not mandated to exercise their discretion in their review of the proposed transactions," and "the fact that the board of directors did not approve the agreement cannot constitute a lack of bona fide honesty or good faith simply because it was not consistent with the feeling of security" that Mr. Benton obtained from Cameco. Id. at 194.

Mr. Benton now appeals the rulings of the district court. We disagree with the district court's conclusion that Cameco lacked minimum contacts with Colorado; however, we hold that "traditional notions of fair play and substantial justice," Asahi Metal Indus. Co. v. Superior Court of Calif., 480 U.S. 102, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987), counsel against an exercise of personal jurisdiction over Cameco. Therefore, we conclude that the district court properly dismissed Mr. Benton's claims because it lacked personal jurisdiction over Cameco.¹

II. DISCUSSION

"We review de novo the district court's dismissal for lack of personal jurisdiction." Soma Med. Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir.1999). "[W]hen the court's jurisdiction is contested, the plaintiff has the burden of proving jurisdiction exists." Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir.1995). "When, as in this case, a district court grants a motion to dismiss for lack of personal jurisdiction without conducting an evidentiary hearing, the plaintiff need only make a prima facie showing of personal jurisdiction to defeat the motion." Soma, 196 F.3d at 1295. "We resolve all factual disputes in favor of the plaintiff in determining whether plaintiff has made a prima facie showing." Far West Capital, Inc. v. Towne, 46 F.3d 1071 1075 (10th Cir.1995). Mr. Benton contends he has made a prima facie showing of the court's jurisdiction over Cameco.

"To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment." Soma, 196 F.3d at 1295 (internal quotation marks omitted). "Colorado's long arm statute is coextensive with constitutional limitations imposed by the due process clause. Therefore, if jurisdiction is consistent with the due process clause, Colorado's long arm statute authorizes jurisdiction over a nonresident defendant." Day v. Snowmass Stables, Inc., 810 F.Supp. 289, 291 (D.Colo.1993) (citing Mr. Steak, Inc. v. District Court, 194 Colo. 519, 574 P.2d 95, 96 (1978)).

Our opinion in OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086 (10th Cir.1998), carefully and succinctly lays out the well-established constitutional analysis for personal jurisdiction:

"The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful `contacts ties, or relations.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Therefore, a "court may exercise personal jurisdiction over a nonresident defendant only so long as there exist `minimum contacts' between the defendant and the forum state." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). The requirement that "minimum contacts" be present protects a defendant, who has no meaningful contact with a state, from the burdens of defending a lawsuit far from home in a forum where the substantive and procedural laws may be quite different from those with which the litigant is familiar. See id. at 292, 100 S.Ct. 559....

The "minimum contacts" standard may be met in two ways. First, a court may, consistent with due process, assert specific jurisdiction over a nonresident defendant "if the defendant has `purposefully directed' his activities at residents of the forum, and the litigation results from alleged injuries that `arise out of or relate to' those activities." Burger King, 471 U.S. at 472, 105 S.Ct. 2174 (internal quotations omitted). Where a court's exercise of jurisdiction does not directly arise from a defendant's forum-related activities, the court may nonetheless maintain general personal...