Commercial Metal Forming v. Utilities Optimization Grp. LLC
| Decision Date | 19 October 2011 |
| Docket Number | CASE NO. 4:11cv228 |
| Parties | COMMERCIAL METAL FORMING, PLAINTIFF, v. UTILITIES OPTIMIZATION GROUP, LLC, DEFENDANT. |
| Court | U.S. District Court — Northern District of Texas |
MEMORANDUM OPINION AND ORDER
This matter comes before the Court upon the motion (Doc. 13) of Defendant Utilities Optimization Group ("Defendant" or "UOG") to dismiss or, in the alternative, to transfer venue. After briefing was complete on the motion to dismiss, Plaintiff Commercial Metal Forming ("Plaintiff" or "CMF") filed a motion for leave to supplement its opposition brief. (Doc. 17). Defendant filed a response (Doc. 19) to Plaintiff's motion to supplement, wherein Defendant basically reiterated its basis for seeking dismissal or transfer of this action in light of the supplemental materials. Plaintiff's motion to supplement is GRANTED and Defendant's motion to dismiss is ripe for disposition. For the reasons that follow, Defendant's motion to dismiss DENIED and its alternative motion to transfer venue is GRANTED.
On February 1, 2011, Plaintiff CMF filed the instant breach of contract action against Defendant UOG seeking damages and declaratory relief. UOG seeks to have this matter dismissed pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure on the basis that this Court lacks personal jurisdiction over it, either general or specific. In the alternative, UOGargues that the matter should be transferred to the United States District Court for the Northern District of Texas under 28 U.S.C. § 1391(a)(2), as it argues that venue in this district is improper.
Plaintiff CMF produces tank heads and tank accessories for different markets, including "air receivers, petrochemical, LP Gas, oil field, construction equipment, rail and truck transportation, oil and gas separation, food processing, and filtration." (Doc. 13-1 at 2.) CMF has its corporate headquarters in Youngstown, Ohio, but operates a satellite office in Saginaw, Texas.1 According to CMF, its Youngstown office has direct control over sales, market pricing, accounting, and all engineering functions.
Defendant UOG entered into a contract (the "Agreement") with CMF for the production of tank heads, which according to CMF were manufactured at its Youngstown headquarters (Compl. ¶ 7.) UOG asserts that it entered into the Agreement with CMF because of its contacts with CMF's representative in Saginaw, Texas, where it claims the tank heads were actually manufactured. (Doc. 13-1 at 2-3.) UOG has provided a declaration by its President and CEO, Joseph D'Amico, attesting that the tank heads were made in Texas and that UOG does not do business or maintain contacts in Ohio. (Doc. 13-2 at 1-2.) Instead, Mr. D'Amico avers that UOG has its corporate headquarters in Pascagoula, Mississippi, and conducts operations in New Orleans, Louisiana. Accordingly, it requests that the Court dismiss this action for want of personal jurisdiction, or, in the alternative, it argues that venue in the Northern District of Ohio is improper, and that the case should be dismissed or transferred to the Northern District of Texas.
CMF asserts in opposition that it routinely did business with UOG without a written contract, even prior to the transaction at issue in this matter, and that the governing termswere set forth on the back of invoices it submitted to UOG. (Doc. 15 at 2.) Those terms, CMF argues, clearly provide that any disputes between the parties would be governed by Ohio law. Id. UOG responds that, with respect to this transaction, it did not receive the invoices from CMF until after the parties had executed the Agreement and the tank heads (which allegedly did not conform to UOG specifications) had been delivered; and, therefore, any terms and conditions on the invoices were not part of the contract.2 (Doc. 16 at 5-6.) Further, UOG argues that a choice of law provision does not constitute a venue provision.
To support the exercise of jurisdiction over a defendant, a plaintiff must establish that (1) personal jurisdiction is authorized by Ohio state law; and (2) the exercise of jurisdiction is in accordance with the Due Process Clause of the Fourteenth Amendment. Theunissen v. Matthews, 935 F.2d 1454, 1459 (6th Cir. 1991). While UOG has moved for the Court to dismiss or transfer this matter, CMF is the party seeking this Court's assertion of personal jurisdiction over UOG.
[T]he party seeking assertion of in personam jurisdiction bears the burden of showing that such jurisdiction exists. [...] When, however, a district court rules on a jurisdictional motion to dismiss made pursuant to Federal Rule of Civil Procedure 12(b)(2) without conducting an evidentiary hearing, the court must consider the pleading and affidavits in a light most favorable to the plaintiff [...]. To defeat such motion, [the party seeking to assert jurisdiction] need only make a prima facie showing of jurisdiction.
Brunner v. Hampson, 441 F.3d 457, 462 (6th Cir. 2006) (quoting CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261-62 (6th Cir. 1996)) (alterations in Brunner); see also, Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002). The Court, however, is not precluded from considering undisputed factual representations made by the defendant that are consistent with those of the plaintiff. Kerry Steel, Inc. v. Paragon Indus., Inc., 106 F.3d 147, 153 (6th Cir. 1997). In the case at hand,the Court will decide this issue upon the written submissions, and, therefore, will proceed in its analysis by viewing the evidence in a light most favorable to CMF. See Bird, 289 F.3d at 871.
Ohio's long-arm statute provides, "A Court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's (1) [t]ransacting any business in this state; [or] (2) contracting to supply services or goods in this state." O.R.C. § 2307.382(A)(1). The phrase "transacting business" has a broader meaning than "contracting," and encompasses prosecuting negotiations, carrying on business, and having dealings. Ky. Oaks Mall Co. v. Mitchell's Formal Wear, 53 Ohio St. 3d 73, 75 (1990). The statute also provides the additional requirement that "only a cause of action arising from acts enumerated in this section may be asserted against [the defendant]." The statute has less reach than the Due Process Clause. Brunner v. Hampson, 441 F.3d 457, 466 (6th Cir. 2007). While a "but-for" relationship between a plaintiff's claim and the defendant's conduct in Ohio satisfies the U.S. Constitution, Ohio's statute requires a "proximate cause" relationship. Id.; Burnshire Dev., LLC v. Cliffs Reduced Iron Corp., 198 F. App'x 425, 433 (6th Cir 2007).
The Sixth Circuit's approach in Burnshire provides guidance on this issue. There, the court examined which of the defendant's alleged contacts met the test for the Ohio statute. 198 F. App'x at 433. After it found that only some of the contacts satisfied the proximate cause standard, it applied the due process analysis solely to those contacts. Id. See also Int'l Techs. Consultants, Inc. v. Euroglas S.A., 107 F.3d 386, 393 (6th Cir. 1997) ().
"In analyzing the due process limits of personal jurisdiction, a distinction is made between 'general' jurisdiction and 'specific' jurisdiction." Conti v. Pneumatic Prods. Corp., 977 F.2d 978, 981 (6th Cir. 1992) (quoting Third Nat'l. Bank in Nashville v. WEDGE Grp., Inc., 882 F.2d 1087, 1089 (6th Cir. 1989)). General jurisdiction exists over a defendant when his or her "contacts with the forum state are of such a continuous and systematic nature that the state may exercise personal jurisdiction over the defendant even if the action is unrelated to the defendant's contacts with the state." Third Nat'l Bank, 882 F.2d at 1089. Here, CMF merely asserts that general jurisdiction over UOG exists, but makes not actual argument on the point. The Court finds that UOG does not maintain continuous and systematic contacts sufficient to sustain general jurisdiction, as will become clear in the discussion of specific jurisdiction.
Specific jurisdiction exists when a plaintiff's claims arise out of or relate to a defendant's contacts with the forum state. Kerry Steel, 106 F.3d at 149; Conti, 977 F.2d at 981. In Southern Machine Co. v. Mohasco Indus., Inc., the Sixth Circuit established a three-part test for determining whether specific jurisdiction exists, which incorporates the due process concerns of the defendant:
First, the defendant must purposefully avail himself of the privilege of acting in the forum state or causing a consequence in the forum state. Second, the cause of action must arise from the defendant's activities there. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with the forum state to make the exercise of jurisdiction over the defendant reasonable.
401 F.2d 374, 381 (6th Cir. 1968).
The purposeful availment requirement is the "sine qua non" for personal jurisdiction. Southern Machine, 401 F.2d at 381-82. It "gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). It also "ensures that a defendant will not be haled into a jurisdiction solely as a result of 'random, fortuitous,' or 'attenuated' contacts, or of the 'unilateral activity of another party or a third person.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). To...
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