St. Jude Medical, Inc. v. Lifecare International

• Decision Date: 11 December 2000
• Docket Number: No. 00-1744,00-1744
• Citation: 250 F.3d 587
• Parties: (8th Cir. 2001) ST. JUDE MEDICAL, INC.; SJM EUROPE, INC., FORMERLY KNOWN AS ST. JUDE MEDICAL INTERNATIONAL, INC.; ST. JUDE MEDICAL EUROPE, INC. PLAINTIFFS - APPELLEES, v. LIFECARE INTERNATIONAL, INC.; TONY DOW DEFENDANTS - APPELLANTS. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 587

250 F.3d 587 (8th Cir. 2001)

ST. JUDE MEDICAL, INC.; SJM EUROPE, INC., FORMERLY KNOWN AS ST. JUDE MEDICAL INTERNATIONAL, INC.; ST. JUDE MEDICAL EUROPE, INC. PLAINTIFFS - APPELLEES, v. LIFECARE INTERNATIONAL, INC.; TONY DOW DEFENDANTS - APPELLANTS.

No. 00-1744

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: December 11, 2000

Filed: May 2, 2001

Appeal from the United States District Court for the District of Minnesota. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before McMILLIAN and John R. Gibson, Circuit Judges, and Laughrey, ¹ District Judge.

Laughrey, District Judge.

St. Jude Medical, Inc., and its subsidiaries ² (St. Jude), manufacture and distribute heart valves and other medical devices. During 1987 and 1988, Lifecare International, Inc. (Lifecare), through its president, Tony Dow, approached St. Jude to become a distributor of St. Jude's products. After negotiations, St. Jude and Lifecare contracted to make Lifecare a distributor for St. Jude's products in certain Middle Eastern countries. In 1992, with the help of Lifecare, St. Jude successfully bid on a contract to supply heart valves and balloon catheters to a purchasing consortium of governments in the Middle East known as the Gulf Corporation Council. The contract was referred to as the GCC Tender No. 11. In 1997, Lifecare obtained a check made out to "St. Jude Medical International, Inc.", in the amount of $1,141,955.14. The check was issued by the Saudi Ministry of Health to pay St. Jude for medical products delivered pursuant to the GCC Tender No. 11. The check belonged to St. Jude, but Lifecare cashed it and refused to turn the proceeds over to St. Jude. In response, St. Jude terminated its distributorship relationship with Lifecare. St. Jude then sued Lifecare and Tony Dow in the United States District Court for the District of Minnesota ³ for conversion, breach of contract and a declaration that Lifecare's distributor status was terminated.

After suit was filed by St. Jude in federal court in Minnesota, Lifecare filed suit against St. Jude in California state court. Lifecare raised both tort and contract claims against St. Jude and Pacesetter, Inc., St. Jude's California subsidiary. St. Jude successfully removed this case to the United States District Court for the Central District of California even though Pacesetter, Inc., was a resident of California. The federal court in California held that Pacesetter, Inc., was fraudulently joined and dismissed it from the lawsuit before transferring the case to the U.S. District Court for the District of Minnesota. Lifecare's claims against St. Jude were treated there as counterclaims to St. Jude's claims against Lifecare.

In the course of the Minnesota litigation, St. Jude learned that a second check had been issued by the Saudi Ministry of Health to St. Jude for GCC Tender No. 11 products. This $880,000.00 check was sent to Arabian Trade House. At trial, St. Jude claimed that Arabian Trade House converted the check and was acting as the agent of Lifecare when it converted the check. After a lengthy trial, the jury found that Lifecare breached its contract with St. Jude and found against Lifecare on its counterclaims. The jury also concluded that Arabian Trade House was Lifecare's agent when it converted the $880,000.00 check. A judgment was entered against Lifecare in the amount of $1,530,735.00.

On appeal, Lifecare and Tony Dow argue that the district court lacked personal jurisdiction over them and had no subject matter jurisdiction to decide Lifecare's claims against St. Jude. They also contend that the District Court's jury instructions were erroneous and summary judgment should not have been entered for St. Jude on Lifecare's claim that St. Jude tortiously interfered with a contract between Lifecare and Arabian Trade House. We affirm.

A. PERSONAL JURISDICTION

The District Court found that Lifecare and Tony Dow were subject to personal jurisdiction in Minnesota because of their contacts with Minnesota. This finding is reviewed de novo. See Burlington Industries, Inc. v. Maples Industries, Inc., 97 F.3d 1100, 1102 (8th Cir. 1996). Two prerequisites must be met to establish personal jurisdiction over a nonresident defendant. The forum state's long arm statute must be satisfied and the due process clause must not be violated. See Stevens v. Redwing, 146 F.3d 538, 543 (8th Cir. 1998). "Because Minnesota long arm statutes extend jurisdiction to the maximum limit consistent with due process, we need only evaluate whether the district court properly found the requirements of due process satisfied." Wessels, Arnold & Henderson v. National Medical Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1995).

The requirements of due process are met if a defendant purposefully establishes minimum contacts with the forum state and the exercise of personal jurisdiction in that state is reasonable. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985). Minimum contacts are established if a "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' the activities." Burger King at 472 (1985) (internal citations omitted). In a contract case a court must consider the parties' prior negotiations, contemplated future consequences and actual course of dealings. The terms of the contract must be taken into account as well. Burger King, 471 U.S. 462 at 479.

Even if the minimum contacts threshold is established, personal jurisdiction may be defeated if its exercise would be unreasonable considering such factors as (a) the burden on the defendant; (b) the interest of the forum State; (c) the plaintiff's interest in obtaining relief; (d) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (e) the shared interest of the several states in furthering fundamental substantive social policy. Asahi Metal Industry Co., Ltd. v. Superior Court of California, Salano County, 480 U.S. 102, 113-14 (1987).

Lifecare and Mr. Dow contend that they did not have sufficient minimum contacts with Minnesota to satisfy due process. We disagree. Lifecare pursued a business relationship with St. Jude, a Minnesota resident. To negotiate its agreement with St. Jude, Mr. Dow phoned and wrote St. Jude personnel in Minnesota. The parties' contract contemplated an ongoing relationship requiring regular communications between Lifecare in California and St. Jude in Minnesota. By the terms of the contract, Lifecare was obligated to assist St. Jude personnel in Minnesota to develop bids to submit to the Gulf Cooperative Consortium. At the time the distributorship agreement was reached, the products to be distributed by Lifecare were being manufactured in Minnesota and payments for those products were to be sent to St. Jude in Minnesota. Even after the contract was established, Mr. Dow and Lifecare called, wrote and visited St. Jude personnel in Minnesota to solicit more business from St. Jude. Finally, Lifecare and Mr. Dow were aware that its conversion of the Saudi Ministry of Health checks would injure St. Jude in Minnesota.

These are not random, fortuitous or attenuated contacts between Mr. Dow, Lifecare and Minnesota, but rather a purposeful connection that should have put Lifecare and Mr. Dow on notice that they could be haled into court in Minnesota. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). See also Wessels, Arnold & Henderson v. National Medical Waste, Inc., 65 F.3d 1427, 1431 (8th Cir. 1980) (personal jurisdiction established where defendants had systematic business relationship with Minnesota resident and numerous mail and telephone contacts); and Northrup King Co. v. Compania Productora Semillas Algodoneras Selectas, S.A., 51 F.3d 1383, 1388 (8th Cir. 1995) (two trips to Minnesota, substantial purchases and extensive written communication showed that contacts were not random).

Lifecare suggests that Wessels is distinguishable because the contract in that case was to be performed in Minnesota. In Wessels, we held that a nonresident who aggressively pursues a business relationship with a Minnesota resident has sufficient minimum contacts with Minnesota to satisfy the due process clause. Like the defendant in Wessels, Mr. Dow and Lifecare aggressively pursued a business relationship with St. Jude, a Minnesota resident, by phone, letter and visits to Minnesota. Moreover, the parties' distribution contract initially dealt with heart valves and other medical devices which were manufactured and shipped from Minnesota, and by the terms of the contract Lifecare was required to help St. Jude personnel in Minnesota prepare bids to submit to the Gulf Cooperative Consortium.

Lifecare and Mr. Dow also contend that Sybaritic, Inc. v. Interport International, Inc., 957 F.2d 522 (8th Cir. 1992), requires a finding that Lifecare and Mr. Dow were not subject to personal jurisdiction in Minnesota. That case involved a distributorship contract which was "negotiated, drafted, presented and executed in Japan." Sybaritic, Inc. v. Interport International, Inc., at 525. Because the nonresident's connection with Minnesota was limited to preliminary negotiations, we found its contacts insufficient to establish personal jurisdiction in Minnesota. Unlike Sybaritic, the distributorship contract between Lifecare and St. Jude was sent from Minnesota to California after Lifecare initiated contact with St. Jude and communicated by phone and letter to St. Jude in Minnesota to obtain the agreement. There was also evidence of a long-term, ongoing business relationship and numerous attempts by Lifecare and Mr. Dow to develop more business opportunities with St. Jude in Minnesota. Finally, a substantial part of the dispute between St. Jude and Lifecare involved the conversion of checks which had been written to St. Jude by the Saudi Health...