Kuan Chen v. U.S. Sports Acad., Inc.

• Decision Date: 15 April 2020
• Docket Number: No. 19-1382,19-1382
• Parties: KUAN CHEN, Plaintiff, Appellant, v. UNITED STATES SPORTS ACADEMY, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

956 F.3d 45

KUAN CHEN, Plaintiff, Appellant,

v.UNITED STATES SPORTS ACADEMY, INC., Defendant, Appellee.

No. 19-1382

United States Court of Appeals, First Circuit.

April 15, 2020

Stanley D. Helinski, Boston, MA, with whom Helinski Law Offices was on brief, for appellant.

Bethany P. Minich, Lynnfield, MA, with whom Litchfield Cavo LLP was on brief, for appellee.

Before Kayatta, Circuit Judge, Souter,^* Associate Justice, and Selya, Circuit Judge.

SELYA, Circuit Judge.

The appeal in this case requires us to explore the frontiers of personal jurisdiction in the internet age. This expedition leads us to conclude — as did the district court — that personal jurisdiction cannot constitutionally be exercised over the defendant in Massachusetts. Accordingly, we affirm the dismissal of the complaint for want of jurisdiction.

I. BACKGROUND

When "[f]aced with a motion to dismiss for lack of personal jurisdiction, a district court may choose from among several methods for determining whether the plaintiff has met [his] burden." Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 34 (1st Cir. 2016) (internal quotation omitted) (quoting Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007) ). This choice is informed chiefly by the state of the record, the extent to which the merits of the underlying claim are intertwined with the jurisdictional issue, and the district court's assessment of whether it would be "unfair to force an out-of-state defendant to incur the expense and burden of a trial" without first requiring a substantial showing of the facts necessary to establish jurisdiction. Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145-46 (1st Cir. 1995) (quoting Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 676 (1st Cir. 1992) ).

Under the prima facie approach — typically used at the early stages of a case — "the district court acts not as a factfinder, but as a data collector," id. at 145, asking only whether the plaintiff has proffered facts that, if credited, would support all findings "essential to personal jurisdiction," id. (quoting Boit, 967 F.2d at 675 ). If the court determines that it would be unfair to the defendant to proceed with the litigation without first requiring the plaintiff to make more than a prima facie showing of jurisdiction, the preponderance-of-the-evidence approach comes into play. See id. at 145-46. Under that approach, the district court holds "a full-blown evidentiary hearing at which the court will adjudicate the jurisdictional issue definitively before the case reaches trial" using a preponderance-of-the-evidence standard. Id. at 146.

If "the assertion of jurisdiction is bound up with the claim on the merits, the possibility of preclusion [may] render[ ] use of the preponderance standard troubling." Id. Where such "special circumstance[s]" obtain, the district court's fallback position typically involves an application of the "likelihood" standard. Id. Under this approach, the district court holds an evidentiary hearing and makes findings limited to "whether the plaintiff has shown a likelihood of the existence of each fact necessary to support personal jurisdiction," leaving for trial the definitive resolution of factual controversies common to both the merits of the underlying claim and the jurisdictional dispute. Id. (quoting Boit, 967 F.2d at 677 ). "[B]y engaging in some differential factfinding, limited to probable outcomes as opposed to definitive findings of fact," the district court can sidestep thorny preclusionary quandaries. Id.

With this paradigm in place, we proceed to the relevant facts and travel of the case. Here, the district court decided the defendant's motion to dismiss for want of personal jurisdiction at the inception of the case and without holding an evidentiary hearing. See Cheng v. U.S. Sports Acad., Inc., No. 18-12533-FDS, 2019 WL 1207863, at *4 (D. Mass. Mar. 14, 2019).¹ Thus, the requirements of the prima facie approach control. See United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001). Consistent with that approach, we draw the relevant facts "from the pleadings and whatever supplemental filings (such as affidavits) are contained in the record, giving credence to the plaintiff's version of genuinely contested facts." Baskin-Robbins, 825 F.3d at 34. Similarly, we "take into account undisputed facts put forth by the defendant." Id.

Defendant-appellee United States Sports Academy, Inc. (USSA) is an educational institution incorporated in Alabama, which has its principal place of business there. USSA is involved mainly in online education, and it is accredited to award bachelor's, master's, and doctoral degrees. USSA's Distance Learning Program allows students to complete their coursework "without leaving their homes or jobs" through an online learning platform accessible twenty-four hours a day in all fifty states.

In 2008, plaintiff-appellant Kuan Chen enrolled in USSA's doctoral program in sports management. At the time of Chen's matriculation, USSA required him to complete all degree requirements within ten years and to pass a comprehensive examination. Between 2008 and 2010, Chen finished forty-two credits of coursework. Chen resided in Alabama during this period, with the exception of one term in Missouri and time spent in an experiential "mentorship" program in New York.

In 2009, USSA gave Chen the option of switching his "degree requirement" from the passage of a comprehensive examination to the completion of a portfolio. Chen accepted USSA's offer. He was subsequently assigned a portfolio advisor and began working on his portfolio in 2010. Chen alleges that he "nearly complete[d]" his portfolio (except for the submission of a few papers) and finished all other requirements for his doctoral degree except his dissertation.

At some point in or after 2010, Chen moved to Massachusetts and took a hiatus from his doctoral program to pursue a master's degree in acupuncture.² Chen does not claim that USSA had any involvement with that degree.

Cognizant that he had only ten years in which to complete his doctoral degree, Chen sought to resume work on his portfolio in 2016 (while apparently still living in Massachusetts). But upon attempting to access his coursework online, Chen discovered that he was locked out and unable to log on to his account. When he contacted USSA, he was informed that he had been "removed from enrollment" and would need to reenroll in order to resume his studies.

Chen submitted an application for reenrollment. In February of 2016, he received an e-mail from USSA acknowledging receipt of his application and advising him that he would have to take a comprehensive examination if his application was accepted. Chen protested that he had switched to the portfolio degree requirement, and the USSA employee with whom he was corresponding told him that she would "look into the issue." Later that month, USSA accepted Chen's reenrollment application, and an admissions counselor confirmed that Chen would only need to complete the portfolio degree requirement.

In May of 2017, Chen again found himself unable to access his online account. After some investigation, he learned that his portfolio had been deleted. The following month, USSA's dean of academic affairs informed Chen that, notwithstanding USSA's previous representations to the contrary, he would be required to pass a comprehensive examination in order to complete his degree. Chen alleges that USSA's actions deprived him of the opportunity to earn his degree "without starting from scratch," resulting in wasted tuition dollars and "the loss of income associated with a degree."

Aggrieved by his treatment, Chen sued USSA in a Massachusetts state court, alleging breach of contract, unfair and deceptive business practices, unjust enrichment, and fraudulent inducement. Citing the existence of diversity jurisdiction, USSA removed the case to the federal district court. See 28 U.S.C. §§ 1332(a), 1441(b). It then moved to dismiss the complaint for want of personal jurisdiction. See Fed. R. Civ. P. 12(b)(2). In a thoughtful rescript, the district court concluded that USSA's general business contacts with Massachusetts did not render USSA "essentially at home" in the Commonwealth such that general jurisdiction could be exercised over USSA there. Cheng, 2019 WL 1207863, at *5 (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) ). The court likewise concluded that Chen's "enrollment in the distance-learning program while in Alabama, followed by a unilateral move to Massachusetts," did not provide a sufficient basis for the exercise of specific jurisdiction. Id. at *8. This timely appeal ensued.

II. ANALYSIS

We divide our analysis into four parts. First, we sketch the contours of the personal jurisdiction inquiry under the prima facie approach. Second, we address Chen's contention that the district court should not have considered an affidavit attached to USSA's motion to dismiss. We then examine, in sequence, whether USSA's contacts with Massachusetts permit the exercise of either general or specific jurisdiction.

A. The Contours of the Inquiry.

The burden of proving that personal jurisdiction may be exercised in the forum state lies squarely with the plaintiff. See Baskin-Robbins, 825 F.3d at 34. "Where, as here, a district court dismisses a case for lack of personal jurisdiction based on the prima facie record, rather than after an evidentiary hearing or factual findings, our review is de novo." Id. (quoting C.W. Downer & Co. v. Bioriginal Food & Sci. Corp., 771 F.3d 59, 65 (1st Cir. 2014) ). In undertaking this tamisage, we are not married to the district court's reasoning but, rather, may uphold the judgment on any ground made manifest by the record. See id.

Under the prima facie approach, an inquiring court must ask whether the plaintiff has "proffer[ed] evidence which, taken at face value, suffices to...