Burlington Industries, Inc. v. Maples Industries, Inc.

• Decision Date: 14 November 1996
• Docket Number: No. 95-3527,95-3527
• Citation: 97 F.3d 1100
• Parties: BURLINGTON INDUSTRIES, INC., Appellee, v. MAPLES INDUSTRIES, INC., Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1100

97 F.3d 1100

40 U.S.P.Q.2d 1318

BURLINGTON INDUSTRIES, INC., Appellee, v. MAPLES INDUSTRIES, INC., Appellant.

No. 95-3527.

United States Court of Appeals Eighth Circuit.

Submitted June 12, 1996.

Decided Oct. 9, 1996.

Rehearing and Suggestion for Rehearing En Banc Denied Nov. 14, 1996.

Thomas C. Walsh, argued, St. Louis, MO (Douglas W. King, on the brief), for appellant.

Elizabeth Robben Murray, argued, Little Rock, AR (Jonann C. Roosevelt and Allison Graves, on the brief), for appellee.

Before WOLLMAN and MORRIS SHEPPARD ARNOLD, Circuit Judges, and ROSENBAUM, ^* District Judge.

ROSENBAUM, District Judge.

Burlington Industries, Inc. ("Burlington"), and Maples Industries, Inc. ("Maples"), compete in the manufacture of carpets and rugs. Burlington brought this diversity action, claiming Maples misappropriated a valuable yarn space-dye trade secret, when it purchased machines incorporating the trade secret from a third-party.

On May 26, 1995, the district court denied Maples' motion to dismiss the action for lack of personal jurisdiction. The district court, thereafter, granted partial summary judgment in favor of Burlington, and entered a preliminary injunction prohibiting the use of the space-dye machines.

Maples appeals the denial of its motion to dismiss and the grant of partial summary judgment. The entry of a preliminary injunction is an appealable order, conferring jurisdiction on this Court, see 28 U.S.C. § 1292(a)(1), and the personal jurisdiction determination may be reviewed at this time. See Land-O-Nod Co. v. Bassett Furniture Indus., Inc., 708 F.2d 1338, 1340 (8th Cir.1983). On review, we reverse the district court's finding of personal jurisdiction, and in the absence thereof, we vacate the district court's subsequent order.

I.

Burlington is a Delaware corporation with its principal place of business in North Carolina. Maples is an Alabama corporation with its principal place of business in Alabama. The companies sell their products to national retailers.

In the fall of 1992, Maples hired a third-party, Bobby Vinson and Associates, Inc. ("BVA"), to service machinery at its Scottsboro, Alabama, manufacturing facility. BVA is an Arkansas corporation with its principal place of business in Arkansas. Three of Burlington's former employees, who are claimed to have had access to confidential Burlington information, were later employed by BVA.

Maples purchased two space-dye machines from BVA in October, 1992, and two others in April, 1993. Burlington contends these four machines incorporate its manufacturing trade secret, allowing economical dyeing of yarn strands in multiple colors at different intervals. The contracts for the sale of these machines were negotiated and executed in Alabama. BVA assembled the machines in Arkansas and shipped them to Maples in Alabama. At no time did a Maples' representative visit BVA's Arkansas facility to negotiate the sales.

Burlington has previously defended its trade secrets in two other federal actions. See Burlington Indus., Inc. v. Bobby Vinson & Assoc., Inc., No. LR-C-93-604 (E.D.Ark.1993); Burlington Indus., Inc. v. Palmetto Spinning Corp., No. CA-95-1467-6-3 (D.S.C.1995), aff'd, 76 F.3d 371 (4th Cir.1996) (tbl.).

II.

We review questions of personal jurisdiction de novo. Barone v. Rich Bros. Interstate Display Fireworks Co., 25 F.3d 610, 612 (8th Cir.), cert. denied sub nom. Hosoya Fireworks Co. v. Barone, --- U.S. ----, 115 S.Ct. 359, 130 L.Ed.2d 313 (1994). When personal jurisdiction is challenged, the plaintiff has the burden to show jurisdiction exists. Gould v. P.T. Krakatau Steel, 957 F.2d 573, 575 (8th Cir.), cert. denied, 506 U.S. 908, 113 S.Ct. 304, 121 L.Ed.2d 227 (1992).

In a diversity action, a federal court may assume jurisdiction over nonresident defendants only to the extent permitted by the long-arm statute of the forum state, and by the due process clause of the Fourteenth Amendment. Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816, 818 (8th Cir.1994). We have previously recognized that the Arkansas long-arm statute authorizes jurisdiction over foreign corporations to the fullest extent allowed by constitutional due process. Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 653 (8th Cir.1982). Therefore, our inquiry devolves into the single question whether the exercise of personal jurisdiction comports with due process.

Due process requires "minimum contacts" between the non-resident defendant and the forum state such that "maintenance of the suit does not offend traditional notions of fair play and substantial justice." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). The defendant's conduct and connection with the forum state must be such that defendant should "reasonably anticipate being haled into court there." World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567.

We have established a five-factor test--the first three factors being of primary importance--to determine the sufficiency of defendant's contacts. We must determine: (1) the nature and quality of contacts with the forum state; (2) the quantity of such contacts; (3) the relation of the cause of action to the contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) convenience of the parties. Land-O-Nod, 708 F.2d at 1340. We have further elaborated on the third factor--the relationship of the cause of action to the contacts--to distinguish between specific and general jurisdiction. Bell Paper Box, 22 F.3d at 819 (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn. 8-9, 104 S.Ct. 1868, 1872 nn. 8-9, 80 L.Ed.2d 404 (1984)). Specific jurisdiction refers to jurisdiction over causes of action arising from or related to a defendant's actions within the forum state while general jurisdiction refers to the power of a state to adjudicate any cause of action involving a particular defendant, regardless of where the cause of action arose.

Id. (internal alterations omitted).

General jurisdiction refers to the power of a state to adjudicate any cause of action and does not depend on the relationship between the cause of action and the contacts. Wessels, Arnold & Henderson v. National Medical Waste, Inc., 65 F.3d 1427, 1432 n. 4 (8th Cir.1995). Where specific personal jurisdiction...