Sgi Air Holdings II LLC. v. Novartis Intern., Ag

• Decision Date: 21 March 2002
• Docket Number: No. CIV.A.01-WY-1983-CB.,CIV.A.01-WY-1983-CB.
• Parties: SGI AIR HOLDINGS II LLC, Plaintiff, v. NOVARTIS INTERNATIONAL, AG, and Novartis AG, Defendants.
• Court: U.S. District Court — District of Colorado

Page 1195

192 F.Supp.2d 1195

SGI AIR HOLDINGS II LLC, Plaintiff, v. NOVARTIS INTERNATIONAL, AG, and Novartis AG, Defendants.

No. CIV.A.01-WY-1983-CB.

United States District Court, D. Colorado.

March 21, 2002.

Michael H. Berger, Scot Melvin Peterson, Koff, Corn & Berger, PC, Denver, CO, for SGI Air Holdings II LLC.

Walter W. Garnsey, Jr., David Richard Fine, Kelly/Haglund/Garnsey & Kahn, LLC, Denver, CO, Paul Howard Schwartz, Cooley, Godward, LLP, Broomfield, CO, Andrew Keith Solow, Kay Scholer, LLP, New York, NY, for Novartis Intern., AG., Novartis AG.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS

BRIMMER, District Judge.

This case arises out of claims made by Plaintiff, SGI Air Holdings II LLC against Defendants Novartis International, AG and Novartis, AG for a breach of contract relating to the sale of an airplane. The case is now before the Court on Defendants' Motion to Dismiss for Lack of Personal Jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) and Motion to Dismiss for Failure to State a Claim Upon Which Relief Can Be Granted pursuant to Fed.R.Civ.P. 12(b)(6). After reading the briefs, hearing oral argument and being fully advised of the premises, the Court FINDS and ORDERS as follows:

Statement of Parties and Jurisdiction

Plaintiff SGI Holdings II LLC ("SGI") is a limited liability company organized under the laws of the state of Delaware. SGI has its principal place of business in Denver, Colorado. Defendant Novartis AG is a Swiss holding company with its principal place of business in Basel, Switzerland. Defendant Novartis International, AG is a Swiss Corporation with its principal place of business in Basel, Switzerland. Novartis International, AG manages the day-to-day activities of Novartis AG. Plaintiff asserts that jurisdiction is proper in this Court pursuant to 28 U.S.C. § 1332, based on diversity of citizenship of the parties and as the amount in controversy is over $75,000. As discussed below, Defendants contend that the Court lacks personal jurisdiction over them.

Background

In the Summer of 2001, Marino Buser, Novartis International's Head of Purchasing, whose office is in Basel, Switzerland retained Aerospace Concepts of Canada ("Aerospace") to act as a broker for the negotiation and potential purchase of a corporate jet aircraft. Aerospace assigned Thomas Chapman, whose office is in Savannah, Georgia to be the primary broker on the deal. Chapman found an advertisement from Plaintiff in his files, and also looked at an internet advertisement for the Bombardier Global Express Jet Aircraft ("Aircraft"), owned by Plaintiff.

In the course of his investigation, Chapman found that the Aircraft was built in Canada and then shipped to Seattle, Washington for completion of the interior. An Aerospace employee inspected the Aircraft at the facility in Seattle, where the Aircraft remained during the period of time applicable for the purposes of this case. The Aircraft itself was never in Colorado.

On June 27, 2001, Buser in Basel, Switzerland authorized Chapman to submit a written offer to Plaintiff for the Aircraft. Chapman did so by fax from his office in Savannah, Georgia. The offer was sent to J. Mesinger Corporate Jet Sales, Inc., Plaintiff's Colorado-based broker and agent. On June 30, 2001, Mesinger, acting on behalf of Plaintiff, responded with a counteroffer sent by fax to Buser in Switzerland. The counteroffer listed a price of $42 million for the Aircraft, subject to terms and conditions as listed in the counteroffer, including an initial $10 million deposit to be put "in a mutually agreeable U.S. aircraft escrow service" which was not necessarily in Colorado. On July 2, 2001, Buser signed the counteroffer on the line entitled "accepted" and faxed it back to Mesinger. Ten days later, Novartis International's attorney, George Miller, faxed Mesinger a letter from Switzerland which indicated that Novartis International did not wish to proceed with the purchase and that they would not be making the initial deposit as required in the counteroffer.

Plaintiff brings this suit alleging that Novartis International, on behalf of its parent corporation, Novartis AG, breached the contract for the purchase of the Aircraft and is liable for damages as a result of the breach. For the purposes of this Order, the Court will only comment on the facts as necessary to decide the issue of personal jurisdiction. As the Court does not find that it has jurisdiction over the Defendants, it will not pass on the merits of Plaintiff's claim, and additional facts related thereto are omitted.

Defendants allege that neither Novartis International nor Novartis AG: 1) owns or leases any property in Colorado; 2) has any offices or employees in Colorado; 3) is authorized, qualified or registered to do business in Colorado; 4) has a registered agent for service in Colorado; 5) has otherwise consented to the exercise of personal jurisdiction by the courts of Colorado; or 6) has insured any person, property or risk in Colorado. Plaintiff does not generally dispute these statements.

Discussion

To establish personal jurisdiction in a diversity case, a plaintiff must show both that jurisdiction is proper under the forum state's long-arm statute and that exercise of personal jurisdiction over the defendant comports with the Due Process Clause of the United States Constitution. See Equifax Services, Inc. v. Hitz, 905 F.2d 1355, 1357 (10th Cir.1990). For the first step of the analysis, the Court turns to Colorado's long-arm statute, which establishes personal jurisdiction over defendants who, either in person or by an agent, engage in various activities within the state including the transaction of business and the commission of a tortious act. See Colo.Rev. Stat. § 13-1-124(1)(a)-(b) (1999). Under Colorado law, this Court may exercise personal jurisdiction to the full extent of the Due Process Clause of the Fourteenth Amendment. See Dart International, Inc. v. Interactive Target Systems, Inc., 877 F.Supp. 541, 543 (D.Colo.1995) (citing Safari Outfitters, Inc. v. Superior Court, 167 Colo. 456, 448 P.2d 783 (1968)).

Therefore, the Court's analysis collapses into a single inquiry as to whether the exercise of personal jurisdiction over Defendant comports with due process. Federal, and not state law, guides the due process analysis. National Business Brokers, Ltd. v. Jim Williamson Productions, Inc., 115 F.Supp.2d 1250, 1253 (D.Colo. 2000), aff'd 2001 WL 912796 (10th Cir. 2001). See also Cubbage v. Merchent, 744 F.2d 665, 667 (9th Cir.1984). "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) (quoting International Shoe Co. v. State of Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). To comport with due process limitations, a court may exercise personal jurisdiction only over defendants that have "certain minimum contacts [with the jurisdiction] ... such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe, 326 U.S. at 316, 66 S.Ct. 154 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)).

This minimum contacts standard may be satisfied in either of two ways—general or specific jurisdiction. See Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 455 (10th Cir.1996). The court's duty is the same in exercising either general or specific jurisdiction, it must guarantee that the exercise of jurisdiction "`does not offend traditional notions of fair play and substantial justice.'" World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980) (quoting International Shoe, 326 U.S. at 316, 66 S.Ct. 154) (internal quotation omitted).

1. General Jurisdiction

General jurisdiction exists when a defendant's contacts with the forum state are so "continuous and systematic" that the state may exercise personal jurisdiction over the defendant, even if the suit is unrelated to the defendant's contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-16 & n. 9, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984).

In the case at bar, Plaintiff asserts that the Court may exercise both general and specific jurisdiction over Defendants. Plaintiff alleges that Defendants have contacts with Colorado that are so continuous and systematic that this Court may exercise general jurisdiction over Defendants. Plaintiff supports this allegation with statements that Novartis sells pharmaceuticals and other products all over the world, including Colorado, and does business through more than 150 subsidiaries, five of which are authorized to do business in Colorado, and one which has its principal place of business in Broomfield, Colorado. See Plaintiff's Response to Motion to Dismiss, p. 9. Plaintiff has alleged only limited contacts with Colorado by Defendants themselves. "For general jurisdiction, the defendant's contacts with the state must be greater than those required for specific jurisdiction." Kuenzle, 102 F.3d at 458 (citing Doe v. National Medical Services, 974 F.2d 143, 146 (10th Cir. 1992)). Thus, Plaintiff is basing its assertion that the Court has general jurisdiction over Defendants not on Defendants' own continuous and systematic contacts with Colorado, but on Defendants' subsidiaries' continuous and systematic contacts with Colorado. In addition to the above statements, Plaintiff attached a statement by Claudia Jones that shows that she found products made by Defendants' subsidiaries, such as Gerber baby foods, Ovaltine, Triaminic, Theraflu, Tavist and Desenex on the shelves of two grocery stores in Denver, Colorado. Plaintiff also attached a recent filing made by Defendants with the Securities and Exchange...