Pro Axess, Inc. v. Orlux Distribution, Inc., No. 03-4179.

• Decision Date: 08 November 2005
• Docket Number: No. 03-4179.,No. 03-4189.
• Citation: 428 F.3d 1270
• Parties: PRO AXESS, INC., Plaintiff-Appellant/Cross-Appellee, v. ORLUX DISTRIBUTION, INC., Defendant/Cross-Appellant, and Sporoptic Pouilloux, Inc., Defendant-Appellee/Cross-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1270

428 F.3d 1270

PRO AXESS, INC., Plaintiff-Appellant/Cross-Appellee, v. ORLUX DISTRIBUTION, INC., Defendant/Cross-Appellant, and Sporoptic Pouilloux, Inc., Defendant-Appellee/Cross-Appellant.

No. 03-4179.

No. 03-4189.

United States Court of Appeals, Tenth Circuit.

November 8, 2005.

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J. Mark Gibb, Durham Jones & Pinegar, P.C., Salt Lake City, Utah (Stephen Marshall, Durham Jones & Pinegar, P.C., Salt Lake City, Utah, with him on the briefs), for Plaintiff-Appellant/Cross-Appellee.

Gifford W. Price, Mackey Price Thompson & Ostler, Salt Lake City, Utah (Gregory N. Jones, Mackey Price Thompson & Ostler, Salt Lake City, Utah, with him on the briefs), for Defendant/Cross-Appellant and Defendant-Appellee/Cross-Appellant.

Before EBEL, Circuit Judge, HENRY, Circuit Judge, and WHITE, District Judge.^*

EBEL, Circuit Judge.

This case arises from a contract dispute between Defendant Sporoptic Pouilloux, S.A. ("Sporoptic"),¹ a French company, and Plaintiff Pro Axess, Inc. ("Pro Axess"), a Utah corporation. The parties raise cross-appeals from a judgment and an associated order entered following a jury trial. Sporoptic, which was held liable for breach of contract, contests the district court's exercise of personal jurisdiction over it. Pro Axess, the prevailing party below, appeals the district court's denial of its post-trial motion for prejudgment interest. We AFFIRM the district court's judgment because we conclude that the court's exercise of personal jurisdiction over Sporoptic was proper. We also AFFIRM the district court's denial of Pro Axess's motion for prejudgment interest.

BACKGROUND

Sporoptic distributes sunglasses. In the mid-1990s, Sporoptic decided to launch a line of low-cost sunglasses in the United States. To minimize the cost of manufacturing these sunglasses, Sporoptic sought to manufacture the frames for the sunglasses in Asia.

Acting both directly and through its wholly-owned subsidiary, Orlux Distribution, Inc. ("Orlux") — a California corporation with responsibility for distributing Sporoptic's sunglasses in the United States — Sporoptic contacted Pro Axess to make the arrangements necessary for such manufacturing. Sporoptic lacked experience dealing with Asian manufacturers, while Pro Axess regularly arranged for the manufacture of sunglasses frames in Asia on behalf of distributors like Sporoptic. In fact, Pro Axess had previously arranged to supply Asian-manufactured sunglasses frames to Sporoptic.

As part of this project, in 1995 Sporoptic contracted with Pro Axess to arrange for the manufacture and delivery of 28,000 sunglasses frames. Sporoptic later cancelled this order. The parties disagreed about whether the order was cancelled in a timely fashion or whether the cancellation was a breach of contract.

In January 1997, Pro Axess filed suit against Sporoptic and Orlux in Utah state court, alleging alternative claims based on breach of contract, promissory estoppel, and misuse of an open credit account. In March 1997, Sporoptic and Orlux removed the case to federal court.

In its answer, Sporoptic disputed the district court's ability to exercise personal jurisdiction over it. The court noted this dispute in its pretrial order but did not rule on the issue. Following a three-day trial in March 2002, a jury found that Sporoptic had breached its contract with Pro Axess and awarded damages of $156,264 to Pro Axess. The jury found that Orlux did not have a contract with Pro Axess and thus had no liability in this case.

After trial, the parties litigated the issue of whether the district court could exercise personal jurisdiction over Sporoptic. The court held that it could, and thereafter entered judgment — erroneously — in favor of Pro Axess against both Sporoptic and Orlux.

The parties filed motions to amend the judgment. In June 2003, the district court denied Pro Axess's motion for prejudgment interest, granted Pro Axess's motion for postjudgment interest, and granted Sporoptic and Orlux's motion to amend the judgment to reflect that it lay only against Sporoptic. The court entered its judgment on July 31, 2003.

On July 18, 2003 — before the district court entered judgment — Pro Axess filed a notice of appeal. Sporoptic cross-appealed on August 1, 2003.

DISCUSSION

We exercise jurisdiction over these appeals pursuant to 28 U.S.C. § 1291.²

I. Personal Jurisdiction

We review de novo the district court's decision to exercise personal jurisdiction over Sporoptic. See Fed. Deposit Ins. Corp. v. Oaklawn Apartments, 959 F.2d 170, 173 (10th Cir.1992). Pro Axess has the burden of proving that the court's exercise of jurisdiction was proper, though it must do so only by a preponderance of the evidence. See Karnes v. Boeing Co., 335 F.3d 1189, 1194 (10th Cir.2003); Soma Med. Int'l v. Standard Chartered Bank, 196 F.3d 1292, 1295 (10th Cir.1999) (examining the issue of personal jurisdiction over non-resident defendants in federal court in Utah).

"To obtain personal jurisdiction over a nonresident defendant in a diversity action, a plaintiff must show that jurisdiction is legitimate under the laws of the forum state and that the exercise of jurisdiction does not offend the due process clause of the Fourteenth Amendment." Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1074 (10th Cir.1995). Because we agree with the parties that "general" personal jurisdiction is not applicable in this case, we turn directly to the issue of "specific" personal jurisdiction. "[T]he evaluation of specific jurisdiction in Utah mandates a three-part inquiry: (1) the defendant's acts or contacts must implicate Utah under the Utah long-arm statute; (2) a `nexus' must exist between the plaintiff's claims and the defendant's acts or contacts; and (3) application of the Utah long-arm statute must satisfy the requirements of federal due process." Soma Med. Int'l, 196 F.3d at 1297 (alteration in original) (quotations omitted); see also Far West Capital, 46 F.3d at 1074. We address the requirements of federal due process before turning to the other two parts of the inquiry, and we hold that all the requirements are satisfied in this case.

A. Federal Due Process

"The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quotations omitted). Thus, a "court may exercise personal jurisdiction over a nonresident defendant only 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, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (quotations omitted). "The minimum contacts necessary for specific personal jurisdiction are established 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." Soma Med. Int'l, 196 F.3d at 1298 (quotations omitted).

Thus, an analysis of whether a court's exercise of specific personal jurisdiction comports with the Due Process Clause is a two-step inquiry. See Benton v. Cameco Corp., 375 F.3d 1070, 1075 (10th Cir.2004), cert. denied, ___ U.S. ___, 125 S.Ct. 1826, 161 L.Ed.2d 723 (2005). First we consider whether "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. 559, 62 L.Ed.2d 490. Second, "if the defendant's actions create sufficient minimum contacts, we must then consider whether the exercise of personal jurisdiction over the defendant offends traditional notions of fair play and substantial justice." OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir.1998) (quotations omitted).

1. Minimum Contacts

In determining whether a defendant has established sufficient minimum contacts with the forum state, we examine whether the defendant "purposefully avail[ed] itself of the privilege of conducting activities within the forum State." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). A defendant's contacts are sufficient if "the defendant purposefully directed its activities at residents of the forum, and . . . the plaintiff's claim arises out of or results from actions by the defendant himself that create a substantial connection with the forum state." OMI, 149 F.3d at 1091 (quotations, citations, and emphasis omitted).

a. Purposeful Availment

The fact that Sporoptic made a contract with Pro Axess, which is located in Utah, is not enough on its own to allow a Utah court to exercise jurisdiction over Sporoptic. See Burger King, 471 U.S. at 478, 105 S.Ct. 2174 ("If the question is whether an individual's contract with an out-of-state party alone can automatically establish sufficient minimum contacts in the other party's home forum . . . the answer clearly is that it cannot.") (emphasis in original). However, "with respect to interstate contractual obligations, . . . 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." Id. at 473, 105 S.Ct. 2174 (quotations omitted).

In this case, Sporoptic solicited Pro Axess's assistance in procuring sunglasses frames. While not conclusive, this solicitation is itself "some evidence suggesting purposeful availment." Far West Capital, 46 F.3d at 1076. Sporoptic specifically sought out Pro Axess because Pro Axess had long-standing business relationships with many manufacturers in Asia.³ While the manufacturing and shipping of the product were not to take place in Utah, services necessary for the...