McFadin v. Gerber

• Citation: 587 F.3d 753
• Decision Date: 09 November 2009
• Docket Number: No. 09-50083.,09-50083.
• Parties: Laurie D. McFADIN, d/b/a Two Bar West; Stacy L. McFadin, d/b/a Two Bar West, Plaintiffs-Appellants, v. Lynn GERBER, d/b/a Foxy Roxy's, d/b/a Eternal Perspective Handbags; William Gerber, II, d/b/a Foxy Roxy's, d/b/a Eternal Perspective Handbags; Connie Grenemyer, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

587 F.3d 753

Laurie D. McFADIN, d/b/a Two Bar West; Stacy L. McFadin, d/b/a Two Bar West, Plaintiffs-Appellants, v. Lynn GERBER, d/b/a Foxy Roxy's, d/b/a Eternal Perspective Handbags; William Gerber, II, d/b/a Foxy Roxy's, d/b/a Eternal Perspective Handbags; Connie Grenemyer, Defendants-Appellees.

No. 09-50083.

United States Court of Appeals, Fifth Circuit.

November 9, 2009.

Charles W. Hanor (argued), Hanor Lively & Cernyar, San Antonio, TX, for Laurie D. McFadin and Stacy L. McFadin.

Joseph Brent Garfield (argued), J. Brent Garfield, P.L.L.C., Arvada, CO, for Lynn Gerber and William Gerber, II.

Clifford L. Beem (argued), Clifford Beem & Associates, PC, Denver, CO, for Grenemyer.

Appeal from the United States District Court for the Western District of Texas.

Before HIGGINBOTHAM and STEWART, Circuit Judges, and ENGELHARDT,^* District Judge.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Today we examine a Texas court's personal jurisdiction over Colorado residents Connie Grenemyer and Lynn and William Gerber. We agree with the district court that there is no jurisdiction over Connie Grenemyer and disagree with the district court's finding of lack of jurisdiction over the Gerbers.

I

Laurie and Stacie McFadin filed suit in the Western District of Texas against Connie Grenemyer, Lynn Gerber, and William Gerber II claiming that Grenemyer breached a sales representative agreement and that both Grenemyer and the Gerbers sold knock-off versions of the McFadins' handbags. The district court dismissed the suit for want of personal jurisdiction.

The McFadins design and manufacture hand-made leather goods, such as handbags and luggage, under the mark Two Bar West, selling wholesale to brick-and-mortar retail stores. Two Bar West's principal place of business is located within the Western District of Texas, where the McFadins reside.

Connie Grenemyer is an independent sales representative who represents various designers and manufacturers in the Rocky Mountain region, which encompasses Arizona, Colorado, Idaho, Montana, New Mexico, Utah, and Wyoming. Grenemyer maintains a showroom at the Denver Merchandise Mart where she displays her clients' merchandise. In addition, Grenemyer brings samples of the merchandise to various retail stores and wholesale markets and shows in her region. In her business she has never traveled to Texas nor does she maintain a website.

In either 1995 or 1996, Grenemyer entered into a sales representative relationship with Two Bar West after the company's former sales representative joined Grenemyer. In 1998, the McFadins approached Grenemyer at the Denver market to discuss a more formal representation, reaching a written agreement. They agreed that Grenemyer would be Two Bar West's primary, if not exclusive, sales representative and Two Bar West provided Grenemyer with samples for her showroom. Under the agreement, Grenemyer received a twelve-percent commission on all sales within the Rocky Mountain region and a six-percent commission on all sales outside that region. Grenemyer took orders from various retailers at her showroom at the Denver market and on her sales trips, faxing the orders to Two Bar West in Texas. Two Bar West then shipped the goods directly to the retailers. The retailers paid Two Bar West, which then mailed commission checks to Grenemyer in Colorado. Over the course of the ten year period, Grenemyer took orders for over $1,000,000 of merchandise from her Denver show room and sales trips in the Rocky Mountain region. Grenemyer never took orders in Texas and only $40,000 of the orders were from Texas based retailers.

In January 2008, the McFadins traveled to Denver and terminated their agreement with Grenemyer. A dispute arose regarding commissions owed to Grenemyer, and Grenemyer refused to return the Two Bar West sample merchandise until the dispute had been settled. The McFadins say that they do not owe Grenemyer additional commissions and that Grenemyer either wrongfully possesses or wrongfully sold around 650 pieces of merchandise.

II

In 2006, Two Bar West sold two handbags to Linda Gerber through Grenemyer. Gerber is the sole proprietor of Foxy Roxy's, which markets a line of women's western wear. Gerber maintains a website, foxyroxys.com, through which she markets her products. The website provides a telephone number and email address where potential customers may contact Gerber in Colorado, however the website does not provide a mechanism to place orders directly. In addition, Gerber attends shows where her products can be displayed. Gerber's only trip to Texas was not for business purposes.

Gerber purchased several more bags from Two Bar West for retail sale. By 2008, when the McFadins terminated Grenemyer, Two Bar West no longer sold Gerber its products. The McFadins allege that this cessation of business followed an email exchange that led Laurie McFadin to believe that Gerber would sell the Two Bar West bags over the internet rather than through brick-and-mortar stores. Gerber maintains she ceased buying the bags "due to numerous problems."

That month, Gerber and her husband, William Gerber II, formed Eternal Perspectives LLC, a Colorado Limited Liability Company. Eternal Perspectives manufactures and markets "western buffalo hide bags and other buffalo products." The bags are marketed through Eternal Perspectives's website, Foxy Roxy's website, and by Grenemyer, who the Gerbers hired as a sales representative. The Eternal Perspectives website, www.eternal perspectives.com, like the Foxy Roxy's website, contains contact information for the Gerbers, but offers no means for a client to purchase through the site. The Eternal Perspectives website also listed Grenemyer as its sales representative. However Grenemyer maintains she has not seen the site and has received no calls as a result of the listing. Grenemyer maintains that sales came solely from purchasers contacting Grenemyer in Colorado, by telephone, email, or at the shows.

III

In March of 2008, Jason Brockman, a resident of Colorado and another independent sales representative, brought pieces of the Eternal Perspectives merchandise line to the Dallas Market Center merchandise trade show in Dallas, Texas. Brockman and Grenemyer knew each other in Denver and would occasionally act as sub-representative at shows the other did not attend. As Grenemyer does not attend the Dallas show, Brockman offered to display some of Grenemyer's lines, including the Eternal Perspectives line. While Grenemyer did not pay Brockman's costs or plan his trip, the Gerbers and Eternal Perspectives contributed to the costs of his booth at the show. Under this sub-representation agreement, the main representative (in this case Grenemyer) received a two-percent over-ride commission and the sub-representative (Brockman) received a ten-percent commission on any sales. At the Dallas show, Brockman made several sales, though not enough to be profitable and only four of the customers were Texas-based. Additionally, Brockman wrote two orders for Eternal Perspectives handbags for Texas-based customers after the show. All six of the orders were small enough to be considered "personal orders" rather than "accounts." These orders were faxed to Grenemyer who then faxed them to the Gerbers. The Gerbers then paid Brockman his commission directly once the Gerbers received payment from the buyers.

IV

Defendants moved to dismiss for lack of personal jurisdiction, improper venue, and insufficient service of process, or alternatively, for a change in venue. The district court, accepting a magistrate judge's report and recommendation, dismissed all claims for lack of personal jurisdiction. The McFadins now appeal.

We review the district court's dismissal for lack of personal jurisdiction de novo.¹ On a challenge to the court's personam jurisdiction, a plaintiff must make only a prima facie showing of the predicate facts.² In turn we "must resolve all undisputed facts submitted by the plaintiff, as well as all facts contested in the affidavits, in favor of jurisdiction."³

A federal court may exercise personal jurisdiction over a nonresident defendant if (1) the forum state's long-arm statute confers personal jurisdiction over that defendant; and (2) the exercise of personal jurisdiction comports with the Due Process Clause of the Fourteenth Amendment.⁴ As the Texas long-arm statute extends as far as constitutional due process allows, we only consider the second step of the inquiry.⁵

The relevant standard for due process is rote: "The plaintiff must show that (1) the defendant purposefully availed himself of the benefits and protections of the forum state by establishing `minimum contacts' with the forum state, and (2) the exercise of personal jurisdiction over that defendant does not offend traditional notions of `fair play and substantial justice.'"⁶ "Where a defendant `has continuous and systematic general business contacts' with the forum state, the court may exercise `general jurisdiction' over any action brought against the defendant. Where contacts are less pervasive, the court may still exercise `specific' jurisdiction `in a suit arising out of or related to the defendant's contacts with the forum.'"⁷ The McFadins claim only specific jurisdiction.

In this circuit, specific personal jurisdiction is a claim-specific inquiry: "A plaintiff bringing multiple claims that arise out of different forum contacts of the defendant must establish specific jurisdiction for each claim."⁸ We have articulated a three-step analysis for specific jurisdiction: "(1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair...