Intercon Inc v. Bell Atlantic Internet Solutions Inc.

• Decision Date: 09 March 2000
• Docket Number: No. 98-6428,98-6428
• Citation: 205 F.3d 1244
• Parties: (10th Cir. 2000) INTERCON, INC., an Oklahoma corporation, Plaintiff-Appellant, v. BELL ATLANTIC INTERNET SOLUTIONS, INC., a Delaware corporation, Defendant-Appellee
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1244

205 F.3d 1244 (10th Cir. 2000)

INTERCON, INC., an Oklahoma corporation, Plaintiff-Appellant, v. BELL ATLANTIC INTERNET SOLUTIONS, INC., a Delaware corporation, Defendant-Appellee.

No. 98-6428

UNITED STATES COURT OF APPEALS TENTH CIRCUIT

March 9, 2000

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA (D.C. No. 97-CV-1620-M)

Submitted on the briefs:

Emmanuel E. Edem, Thomas A. Wallace of Norman, Edem, McNaughton & Wallace, Oklahoma City, Oklahoma, for Plaintiff-Appellant.

James R. Webb of McAfee & Taft, P.C., Oklahoma City, Oklahoma, and Daniel F. Katz, Robert A. Van Kirk, John C. Shipley, Jr. of Williams & Connolly, Washington, D.C., for Defendant-Appellee.

Before BALDOCK, HENRY, and MURPHY, Circuit Judges.

MURPHY, Circuit Judge.

Plaintiff-appellant Intercon, Inc., appeals the district court's order dismissing its action against defendant Bell Atlantic Internet Solutions, Inc., for lack of personal jurisdiction. Because plaintiff made a prima facie showing that defendant purposefully directed its conduct at the forum state, and that this conduct caused plaintiff's harm, we reverse the district court's decision and remand the case for further proceedings.¹

Plaintiff, an Oklahoma corporation, operates an Internet access service which provides customers with access to the World Wide Web and carries their electronic mail (e-mail) messages back and forth. For Internet routing purposes, plaintiff's domain name is "icon.net."

In July 1996, defendant, a Delaware corporation doing business in the northeastern and mid-Atlantic United States, began offering a dial-up Internet service. Because of certain provisions of the Telecommunications Act of 1996, defendant was not permitted to carry telephone transmissions across regional boundaries, but was required instead to use a global service provider to transmit the e-mail messages and Internet traffic. Defendant offered its subscribers a choice between several global service providers, including a New Jersey company called ICon CMT, whose domain name was "iconnet.net." Beginning in July 1996, defendant mistakenly routed its customer's e-mail messages to the wrong domain name, thus using plaintiff's mail server instead of ICon CMT's server.

In late October and early November, plaintiff's mail server experienced a severe slow-down in processing ability due to the thousands of mail messages being routed through it by defendant. Plaintiff's support personnel also began receiving e-mail and telephone inquiries from defendant's customers regarding the speed of their e-mail delivery. After plaintiff's president, Wes Chew, contacted defendant on several occasions, defendant began taking steps to correct the problem. Defendant finally terminated its use of plaintiff's facilities on February 20, 1997, by completely blocking customer access to the mail server.

Plaintiff brought this action against defendant in the United States District Court for the Western District of Oklahoma, seeking compensation for defendant's unauthorized use of the mail server and the damages caused thereby. To establish the existence of personal jurisdiction over defendant, plaintiff's president stated in an affidavit that he began contacting defendant in late October about the unauthorized use of plaintiff's mail server; that he was advised that defendant knew it was routing traffic to plaintiff's server and that e-mail traffic from approximately 12,000 of defendant's subscribers was involved; that on one occasion he identified himself as one of defendant's subscribers and was given plaintiff's phone number for technical support; that even after contacting defendant about the unauthorized use he was not given a time frame within which defendant intended to correct the problem; that it was only after he engaged an attorney in late November that defendant agreed to stop giving the incorrect address to its customers by December 31, 1996, and to revise its Internet access program to prevent its subscribers from being routed through plaintiff's server by February 20, 1997; and that as a programmer familiar with Internet access and e-mail services, it was his opinion that defendant could have blocked customer access to the Oklahoma mail server immediately upon discovering the problem. See Appellant's App. at 74-78. In response, defendant submitted an affidavit stating that it conducted no business in Oklahoma; that it was not informed of the problem until "late December"; that it took immediate steps to halt the flow of e-mail traffic; and that it finally interrupted its customers' service on February 20, 1997. See id. at 80-84. The district court granted defendant's motion to dismiss, finding defendant's contacts with the forum state of Oklahoma were not purposefully established. See id. at 72-73. This appeal followed.

We review the district court's jurisdictional ruling de novo and resolve all factual disputes in favor of plaintiff. See OMI Holdings, Inc. v. Royal Ins. Co., 149 F.3d 1086, 1091 (10th Cir. 1998). Although plaintiff bears the burden of establishing personal jurisdiction over defendant, see id., in the preliminary stages of litigation this burden is "light." Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995).

Where, as in the present case, there has been no evidentiary hearing, and the motion to dismiss for lack of jurisdiction is decided on the basis of affidavits and other written material, the plaintiff need only make a prima facie showing that jurisdiction exists. The allegations in the complaint must be taken as true to the extent they are uncontroverted by the defendant's affidavits. If the parties present conflicting affidavits, all factual disputes must be resolved in the plaintiff's favor, and the plaintiff's prima facie showing is sufficient notwithstanding the contrary presentation by the moving party. However, only the well pled facts of plaintiff's complaint, as distinguished from mere conclusory allegations, must be accepted as true.

Id. (citations and quotations omitted).

To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show both that jurisdiction is proper under the laws of the forum state and that the exercise of jurisdiction would not offend due process. See Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1074 (10th Cir. 1995). Because Oklahoma's long-arm statute permits the exercise of any jurisdiction that is consistent with the United States Constitution, the personal jurisdiction inquiry under Oklahoma law collapses into the single due process inquiry. See Rambo v. American S. Ins. Co., 839 F.2d 1415, 1416 (10th Cir. 1988).

The Due Process Clause permits the exercise of personal jurisdiction over a nonresident defendant "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 (1980) (quotation omitted). 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 Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quotations and citations omitted). When a plaintiff's cause of action does not arise directly from a defendant's forum-related activities, the court may nonetheless maintain general personal jurisdiction over the defendant based on the defendant's business contacts with the forum state. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414-16 & n.9 (1984).

Even if defendant's actions created sufficient minimum contacts, we must still consider whether the exercise of personal jurisdiction over defendant would offend traditional notions of "fair play and substantial justice." Burger King Corp., 471 U.S. at 476 (quotation omitted). This inquiry requires a determination of whether the district court's exercise of personal jurisdiction over defendant is reasonable in light of the circumstances surrounding the case. See id. at 477-78.

Here, accepting plaintiff's evidence as true, we conclude that plaintiff has shown that defendant purposefully directed its conduct toward Oklahoma after the end of October 1996. At that point, defendant had notice that it was routing its customer's e-mail through the Oklahoma mail server and that the unauthorized traffic was causing problems for the Oklahoma-based company. It is possible that defendant knew this information even earlier, as it was already providing plaintiff's phone number to its customers for...