Ealing Corp. v. Harrods Ltd.

• Decision Date: 16 May 1986
• Docket Number: No. 85-1813,85-1813
• Citation: 790 F.2d 978
• Parties: The EALING CORPORATION, Plaintiff, Appellant, v. HARRODS LIMITED, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 978

790 F.2d 978

The EALING CORPORATION, Plaintiff, Appellant, v. HARRODS LIMITED, Defendant, Appellee.

No. 85-1813.

United States Court of Appeals, First Circuit.

Argued Feb. 4, 1986.

Decided May 16, 1986.

William P. Stimson with whom Katherine J. Ross and Sullivan & Worcester, Boston, Mass., were on brief, for plaintiff, appellant.

Joseph L. Cotter with whom John C. Englander and Goodwin, Procter & Hoar, Boston, Mass., were on brief, for defendant, appellee.

Before COFFIN and BOWNES, Circuit Judges, and PETTINE, ^* Senior District Judge.

BOWNES, Circuit Judge.

Plaintiff-appellant Ealing Corporation (Ealing) appeals the dismissal of its combination contract/tort claim against defendant-appellee Harrods, Ltd. (Harrods) for "lack of jurisdiction over the person." Fed.R.Civ.P. 12(b)(2). Ealing alleged that Harrods breached express and implied agreements governing a marketing venture between the two companies whereby a "pilot scheme" was set up for the catalog sale of Harrods' merchandise in the United States. In addition, Ealing alleged that its business relationship with Harrods was premised upon Harrods' false and misleading representations on which Ealing relied to its detriment. After both parties had submitted numerous affidavits and exhibits, the district court dismissed the action for lack of personal jurisdiction. We disagree with the district court's conclusion that there was no basis for jurisdiction under state law.

It is well settled that when a court's personal jurisdiction over a defendant is contested, the plaintiff has the burden of showing that jurisdiction exists. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936); Dalmau Rodriguez v. Hughes Aircraft Co., 781 F.2d 9, 10 (1st Cir.1986); Escude Cruz v. Ortho Pharmaceutical Corp., 619 F.2d 902, 904 (1st Cir.1980); Lizotte v. Canadian Johns-Manville Company, 387 F.2d 607, 608 (1st Cir.1967). This burden, absent an evidentiary hearing, ¹ is a threshold requirement. If the plaintiff makes a prima facie showing of jurisdiction supported by specific facts alleged in the pleadings, affidavits, and exhibits, its burden is met. See Kowalski v. Doherty, Wallace, Pillsbury and Murphy, 787 F.2d 7, 9-10 (1st Cir.1986); Murphy v. Erwin-Wasey, Inc., 460 F.2d 661, 665 (1st Cir.1972); 2 J. Moore, J. Lucas, H. Fink & C. Thompson, Moore's Federal Practice p 4.41-1, 4-471-72 (2d ed. 1986); 2A J. Moore & J. Lucas, Moore's Federal Practice p 12.07[2.-2], 12-55-56 (2d ed. 1985).

Harrods is a British corporation which operates the renowned "Harrods" retail store in the Knightsbridge section of London. Harrods is not registered to do business in Massachusetts nor has it ever owned or leased property in Massachusetts. Ealing is a Delaware corporation. Its principal place of business is in South Natick, Massachusetts.

In the late spring/early summer of 1983, Paul D. Grindle, chairman of Ealing's board of directors and its chief executive officer, approached Harrods with a marketing proposal. The essence of Grindle's plan was that a joint mail order venture be established whereby Ealing would, through one of its subsidiaries engaged in the mail order sale of fine merchandise, utilize its expertise to prepare and distribute a catalog which offered Harrods' merchandise by mail to selected customers in the United States and abroad. During discussions that summer, primarily between Grindle and Harrods' assistant managing director, Lionel F. Drewitt, Harrods decided to deal only with Ealing and not its subsidiary. In September 1983, it was decided that initially Ealing would proceed under a pilot scheme to produce and distribute 50,000 copies of a 32-page catalog of crystal, glass, and china products. Discussions in October and November between Grindle and representatives of Harrods focused on the operational details of the pilot scheme.

Although negotiations regarding the operation of the scheme had taken place in London, Grindle was in South Natick, Massachusetts, when he received a telex on December 9, 1983, from Drewitt containing a "draft letter of agreement" containing twelve paragraphs of terms and conditions respecting the pilot scheme. The final draft mirrored the telex with the exception of the commencement and completion dates which had been left blank in the telex. With the exception of paragraph two pertaining to the form of the pilot scheme, none of the terms in Harrods' telex had been the subject of discussion in London. Paragraph one stated in part: "Although it is Harrods intention to negotiate with you [with] regard to the establishment of a long-term major U.S. mail order business, if the pilot scheme is successful, Harrods are [sic ] not entering into any commitment in this respect." It is this statement which forms the basis of Ealing's fraudulent misrepresentation claim. Plaintiff contends that, even if the pilot scheme proved successful, it was never Harrods' intention to negotiate with regard to a long-term business arrangement.

Under the agreement, "[a]ll costs incurred by the parties as a result of their participation in the pilot scheme shall be borne by the parties individually" and Harrods was entitled to receive "all monies from customers in respect of purchase orders" with "no commission or other remuneration" payable to Ealing. In essence Ealing initially was to operate and finance the pilot scheme under the guidelines and restrictions set forth by Harrods. In return, Harrods agreed that should the pilot scheme prove successful, it intended to negotiate further with Ealing regarding the establishment of a long-term major United States mail order business. The draft letter ended by stating: "Please confirm your acceptance of these terms and conditions by countersigning and returning to us the duplicate copy of this[ ] letter."

On December 12, 1983, Grindle telexed his reply: "We accept your proposal and all the terms and conditions of the agreement as you present it." He suggested a starting date of December 28, 1983, and a completion date of April 30, 1984. In addition, the telex stated: "We would not like to see the paper work caught up in the Christmas mail. I will be coming to England this weekend. Would it be convenient for you if I come to your office on Monday, December 19, to sign the confirmatory final papers?" On December 20, Grindle signed the agreement in London in its letter form addressed to him in Massachusetts.

In January 1984, Ealing mailed out 49,810 "Harrods of London" catalogs. Approximately 25,000 were mailed to United States customers of Harrods whose names and addresses Harrods had provided under the terms of the agreement.

After the first mailing, discussions ensued in January 1984 regarding an additional enlarged catalog mailing to enable the parties to evaluate fully the success of the venture. Part of the discussions had to do with Ealing's expectation of compensation for the additional 250,000 catalog mailing, as well as for a three-year marketing projection proposal and the preparation of a new 64-page catalog for fall distribution. An April 17, 1984 telex to Grindle in Massachusetts from Joseph Llewellyn Coxwell, a director of Harrods, advised Ealing of Harrods' consent to the project while at the same time limiting its commitment to the existing agreement and the success of the venture. The telex stated that payment would have to be discussed with Drewitt on Grindle's next visit to London. In May 1984, Ealing mailed out approximately 250,000 additional catalogs of which approximately 47,800 were mailed to existing customers of Harrods. During the eleven months that the pilot scheme was operational, Harrods shipped and was paid for orders totalling $522,080.10, of which $13,385.36 were orders placed by Massachusetts customers.

Grindle was in London during early June 1984 for a scheduled meeting to discuss the success of the joint marketing venture and negotiate additional proposals. The meeting was cancelled due to Drewitt's unavailability. Grindle, however, felt reassured by the meeting agenda and other verbal assurances that it was still Harrods' intention to negotiate a long-term arrangement. After returning to the United States, Grindle received by regular mail on June 13 a letter dated May 25, 1984, amending the original agreement in one respect: authorizing the 250,000 catalog mailing and extending the agreement to September 30, 1984. After advising Drewitt's office that he had just received the letter, Grindle countersigned the agreement as requested and returned it to Harrods. Subsequently, on July 13, Grindle, who was again in London, hand delivered a memo dated July 11, 1984, to Coxwell of Harrods expressing his uneasiness at how the pilot scheme was being handled.

Grindle, while in London, worked daily from July 13 to July 26 on preparing the fall catalog. No one from Harrods directed him to suspend activities. At a meeting on July 26, 1984, Drewitt asked Grindle how the fall catalog was progressing. It was at this point that the business relationship broke down. Grindle refused to lay out more than the costs already incurred without compensation and/or further negotiations. Drewitt insisted that Harrods and Ealing had an agreement that precluded compensation. Drewitt did not discuss the success of the pilot scheme nor did he address the issue of further negotiations. The upshot was that Harrods' relationship with Ealing would be wound down and terminated. Subsequent discussion the next day resulted in Ealing's maintaining the South Natick, Massachusetts, operation through September 30, 1984, if Harrods underwrote all costs. On returning to Massachusetts in late July, Grindle found a letter from Coxwell dated July 13, 1984, directing Ealing to suspend preparation of the fall catalog. The letter was in response to Grindle's hand delivered memo dated July 11.

The pilot scheme involved almost daily communications by telex,...