Daktronics, Inc. v. Lbw Tech Co., Inc.

Decision Date01 August 2007
Docket NumberNo. 24331.,24331.
Citation2007 SD 80,737 N.W.2d 413
PartiesDAKTRONICS, INC., Plaintiff and Appellant, v. LBW TECH CO., INC. and Ling Tang, Defendants and Appellees.
CourtSouth Dakota Supreme Court

Rochelle R. Cundy, Roberto A. Lange of Davenport, Evans, Hurwitz & Smith, LLP, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.

Alan F. Glover, Jody Odegaard Smith of Glover & Helsper, PC, Brookings, South Dakota, Attorneys for defendants and appellees.

MEIERHENRY, Justice.

[¶ 1.] Daktronics, Inc. brought suit against LBW Tech Co., Inc. and Ling Tang in South Dakota seeking a declaratory judgment and damages for deceit and negligent misrepresentation. LBW and Daktronics had entered into a contract wherein LBW would facilitate Daktronics' exploration of business opportunities in China. Under the contract, LBW attempted to secure contracts between Daktronics and Chinese businesses. LBW and Tang filed a motion to dismiss pursuant to SDCL 15-6-12(b) for lack of personal jurisdiction, improper venue and/or forum non conveniens. The circuit court dismissed the action based upon lack of personal jurisdiction. Daktronics appeals. Because we conclude that sufficient minimum contacts existed to confer personal jurisdiction over the defendants, we reverse.

[¶ 2.] "We review issues regarding a court's jurisdiction as questions of law under the de novo standard of review." Grajczyk v. Tasca, 2006 SD 55, ¶8, 717 N.W.2d 624, 627 (citing State ex rel. LeCompte v. Keckler, 2001 SD 68, ¶ 6, 628 N.W.2d 749, 752). We recently discussed the proper standard of review for a motion to dismiss under SDCL 15-6-12(b):

A motion to dismiss under SDCL 15-6-12(b) tests the legal sufficiency of the pleading, not the facts which support it. For purposes of the pleading, the court must treat as true all facts properly pled in the complaint and resolve all doubts in favor of the pleader. "Our standard of review of a trial court's grant or denial of a motion to dismiss is the same as our review of a motion for summary judgment—is the pleader entitled to judgment as a matter of law?" Thus, all reasonable inferences of fact must be drawn in favor of the non-moving party and we give no deference to the trial court's conclusions of law.

Guthmiller v. Deloitte & Touche, LLP, 2005 SD 77, ¶4, 699 N.W.2d 493, 496 (quoting Vitek v. Bon Homme County Bd. of Com'rs, 2002 SD 100, ¶7, 650 N.W.2d 513, 516).

[¶ 3.] In this case, the only evidence before the court consisted of documentary evidence, including affidavits and declarations. "We review a district court's determination regarding personal jurisdiction based on written submissions in the light most favorable to the nonmoving party." Stanton v. St. Jude Medical, Inc., 340 F.3d 690, 693 (8th Cir.2003) (citing Wines v. Lake Havasu Boat Mfg., Inc., 846 F.2d 40, 42 (8th Cir.1988) (per curiam)). Because the circuit court did not hear testimony or hold a fact-finding hearing, we are required to resolve factual disputes in favor of Daktronics.

[¶ 4.] "The inquiry into whether a court may assert personal jurisdiction over a nonresident defendant is two-fold." Denver Truck and Trailer Sales, Inc. v. Design and Bldg. Servs., Inc., 2002 SD 127, ¶ 9, 653 N.W.2d 88, 91. The first inquiry is whether the legislature granted the court jurisdiction pursuant to South Dakota's Long Arm Statute, SDCL 15-7-2. Id. The second inquiry is "whether the proposed assertion of jurisdiction comports with federal due process requirements." Id.

[¶ 5.] As to the first inquiry, the court determined that it had jurisdiction under the Long Arm Statute. LBW and Tang do not challenge the court's determination. It is the second inquiry of whether jurisdiction comports with due process that is at issue. The due process inquiry requires this Court to decide whether LBW/Tang had sufficient minimum contacts with South Dakota to conclude that the assertion of jurisdiction does not offend "traditional notions of fair play and substantial justice." See Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citations omitted). It is also essential that there be some act of LBW/Tang by which they purposefully availed themselves of the privilege of conducting activities within South Dakota, thus invoking the benefits and protections of its laws. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985) (quotation omitted). "This `purposeful availment' requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of `random,' `fortuitous,' or `attenuated' contacts...." Id. (quotation omitted). Moreover, LBW/Tang's conduct and connection with South Dakota must be such that they would reasonably anticipate being haled into South Dakota courts. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980) (citations omitted).

[¶ 6.] Construing the United States Supreme Court's precedent regarding federal due process requirements, we have established a three step test to determine whether minimum contacts exist and due process is satisfied. Frankenfeld v. Crompton Corp., 2005 SD 55, ¶17, 697 N.W.2d 378, 384 (citing Rothluebbers v. Obee, 2003 SD 95, ¶26, 668 N.W.2d 313, 322). Under this test:

First, the defendant must purposefully avail himself of the privilege of acting in the forum state, thus invoking the benefits and protections of its laws. Second, the cause of action must arise from defendant's activities directed at the forum state. Finally, the acts of defendant must have substantial connection with the forum state to make the exercise of jurisdiction over defendant a reasonable one.

Id. (citing Rothluebbers, 2003 SD 95, ¶26, 668 N.W.2d at 322; Denver Truck, 2002 SD 127, ¶ 11, 653 N.W.2d at 91; Opp v. Nieuwsma, 458 N.W.2d 352, 355-56 (S.D. 1990)).

[¶ 7.] We must review the facts under this three step test. Daktronics is a South Dakota corporation with its principal place of business in Brookings, South Dakota. Its business consists of designing, manufacturing and selling display systems used for athletics, business and transportation. LBW is a Nevada entity with its principal place of business in California. It acts in the capacity of a business consultant and intermediary contact between companies in China and the United States. Tang is the chief executive officer and authorized representative of LBW and a California resident.

[¶ 8.] Daktronics and LBW/Tang entered into a consulting agreement. Daktronics signed the agreement in South Dakota and then mailed it to Tang in California. Tang signed the agreement in California and forwarded the fully executed agreement back to South Dakota. The agreement did not contain a choice of law provision or a forum selection clause. The agreement required Tang to perform consulting work in China and Daktronics to provide payment for her services.

[¶ 9.] The following contacts between LBW/Tang and South Dakota are not in dispute: (1) Tang telephoned, e-mailed and faxed Daktronics executives in South Dakota; (2) she visited Daktronics' headquarters in South Dakota at the expense of Daktronics;1 (3) while in South Dakota, Tang and Daktronics discussed a potential business relationship; (4) after her visit, Tang sent e-mails to and telephoned South Dakota; (5) Tang and Daktronics entered into a three-year consulting agreement, partially executed in South Dakota; (6) in accordance with the agreement, Tang sent status reports and reimbursement requests to South Dakota; and (7) Tang received payment for her services and reimbursement for her expenses from South Dakota.

[¶ 10.] The disputed facts center on who initiated contact between the parties and who solicited whose business. Daktronics submits that LBW/Tang initiated contact and solicited business with Daktronics, and LBW/Tang claim Daktronics initiated contact and solicited business with Tang. However, "[i]t is [ordinarily] not significant that one or the other party initiated the relationship." Gen. Elec. Co. v. Deutz AG, 270 F.3d 144, 151 (3rd Cir.2001) (citation omitted). Rather, "the intention to establish a common venture extending over a substantial period of time is a more important consideration." Id. Furthermore, although LBW/Tang relied heavily on this fact at oral argument,2 we look at all of the contacts between an out-of-state resident and the forum, not one single factor. See Logan Productionss, Inc. v. Optibase, Inc., 103 F.3d 49, 53 (7th Cir.1996) ("the constitutionality of jurisdiction does not turn on which party `started it.' Rather, pinning down which party initiated the transaction is merely one helpful factor in the jurisdictional equation") (citing Madison Consulting Group v. South Carolina, 752 F.2d 1193, 1202 (7th Cir.1985)).

[¶ 11.] With respect to interstate contractual obligations, like the one here, the United States Supreme Court has emphasized that "parties who `reach out beyond one state and create continuing relationships and obligations with citizens of another state' are subject to regulation and sanctions in the other State for the consequences of their activities." Burger King Corp., 471 U.S. at 473, 105 S.Ct. at 2182, 85 L.Ed.2d 528 (quoting Travelers Health Assn. v. Virginia, 339 U.S. 643, 647, 70 S.Ct. 927, 929, 94 L.Ed. 1154 (1950)) (additional citation omitted). The Court stated:

[W]here the defendant `deliberately' has engaged in significant activities within a State, or has created `continuing obligations' between himself and residents of the forum, he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by `the benefits and protections' of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well.

Id. at 475-76, 105 S.Ct. at 2184, 85 L.Ed.2d 528 (internal quotations omitted).

...

To continue reading

Request your trial
12 cases
  • Karst v. Shur-Company, s. 27348
    • United States
    • South Dakota Supreme Court
    • 20 Abril 2016
  • Burley v. Kytec Innovative Sports Equip., 24132.
    • United States
    • South Dakota Supreme Court
    • 1 Agosto 2007
    ... ... KYTEC INNOVATIVE SPORTS EQUIPMENT, INC., Defendant and Appellee. and ... West Central School ... , 254 F.3d 706, 715 (8th Cir.2001) (citing Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 156, 119 S.Ct. 1167, ... ...
  • In re J.D.M.C.
    • United States
    • South Dakota Supreme Court
    • 12 Septiembre 2007
    ...that the assertion of jurisdiction does not offend `traditional notions of fair play and substantial justice.'" Daktronics, Inc. v. LBW Tech Co., Inc., 2007 SD 80, ¶ 5, 737 N.W.2d 413, 416-17 (quoting Int'l Shoe Co., 326 U.S. at 316, 66 S.Ct. at 158, 90 L.Ed. 95). "[A]n essential criterion ......
  • American Fam. Mut. Ins. v. Auto-Owners Ins.
    • United States
    • South Dakota Supreme Court
    • 5 Noviembre 2008
    ...Inc., 2006 SD 85, ¶ 4, 722 N.W.2d 554, 556 (citation omitted). The standard of review for questions of law is de novo. Daktronics Inc. v. LBW Tech. Co., 2007 SD 80, ¶ 2, 737 N.W.2d 413, 416 (citations [¶ 10.] "`On appeal, this Court can read a contract itself without any presumption in favo......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT