Suncoke v. Man Ferrostaal Aktiengesellschaft

• Decision Date: 20 April 2009
• Docket Number: No. 08-5414.,08-5414.
• Parties: SUNCOKE ENERGY INC., fka Sun Coke Company, Plaintiff-Appellant, v. MAN FERROSTAAL AKTIENGESELLSCHAFT; Man Ferrostaal do Brasil Comercio e Industria Ltda., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

563 F.3d 211

SUNCOKE ENERGY INC., fka Sun Coke Company, Plaintiff-Appellant, v. MAN FERROSTAAL AKTIENGESELLSCHAFT; Man Ferrostaal do Brasil Comercio e Industria Ltda., Defendants-Appellees.

No. 08-5414.

United States Court of Appeals, Sixth Circuit.

Argued: January 15, 2009.

Decided and Filed: April 20, 2009.

ARGUED: Richard W. Foltz, Jr., Pepper Hamilton, Philadelphia, Pennsylvania, for Appellant. Sydney B. McDole, Jones Day, Dallas, Texas, for Appellees. ON BRIEF: Richard W. Foltz, Jr., Pepper Hamilton, Philadelphia, Pennsylvania, W. Kyle Carpenter, Woolf, McClane, Bright, Allen & Carpenter, Knoxville, Tennessee, for Appellant. Sydney B. McDole, Jones Day, Dallas, Texas, W. Thomas Dillard, Wayne A. Ritchie II, Ritchie, Dillard & Davies, Knoxville, Tennessee, for Appellees.

Before: MERRITT, ROGERS, and WHITE, Circuit Judges.

MERRITT, J., delivered the opinion of the court, except as to Part III, and delivered an opinion as to Part III. WHITE, J., (pp. 217-19), delivered a separate concurring opinion. ROGERS, J., (pp. 219-22), delivered a separate opinion, dissenting in part.

OPINION

MERRITT, Circuit Judge.

This is a diversity action for injunctive relief seeking the return of confidential trade information generated and provided by SunCoke Co. of Knoxville, Tennessee to the defendant, MAN Ferrostaal, a German engineering and construction company. Relying on the Tennessee long-arm statute, SunCoke brought suit in federal court in Knoxville, where its principal place of business is located. The District Court dismissed for lack of personal jurisdiction. It held that the activities of the German corporation did not create a sufficiently "substantial connection with the forum state," Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985), to meet the due process standard of "fair play and substantial justice," Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 116, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1982). This broad constitutional standard requires us to consider all of the facts concerning the business relationship at issue to determine whether the exercise of federal jurisdiction is reasonable under the circumstances.¹ We believe that the defendant's dealings with SunCoke in Tennessee were substantial enough to meet the due process standard, and hence we reverse and remand the case for further proceedings.

I.

The two parties entered into a detailed contract in April 2001, focused on the disclosure of the confidential trade information, which the parties described as "highly valuable." The stated use of the information by Ferrostaal was to develop coke and related co-generation facilities in Brazil. In anticipation of possible future disputes, the contract provided a set of equitable remedies in case of misuse of the information,² and included two distinct forum-selection provisions, one for equitable claims and the other for legal claims. As to equitable claims, the contract provides that "a claim for equitable relief ... may be brought to any court of competent jurisdiction," while other claims are to be arbitrated in Paris under certain international rules of arbitration.³

In this equitable action by the Tennessee corporation against the German corporation, the parties have treated the contract forum-selection clause for equitable relief—calling for adjudication in "any court of competent jurisdiction"—to mean any court with personal jurisdiction under the "minimum contacts," due process test of International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The defendant was not personally served with process in the forum state, so the question before us is whether the activities of the defendant with respect to the confidential trade information meet the "minimum contacts" test that would justify finding personal jurisdiction in the Tennessee federal court. We conclude that the test is satisfied primarily because of defendant's travels to Tennessee and its communications sent to and received from Tennessee about the proprietary information that originated in Tennessee and was to be returned there under the contract between the parties. The parties contemplated in their contract that litigation for injunctive relief might become necessary. A federal court in the United States with the most contacts with the transaction in question would be one logical place to resolve the dispute. The contract itself gives an explanation of differences between law and equity that contemplates a lawsuit brought to a "competent" court presumably familiar with this common law distinction and the various forms of injunctive relief and specific performance referred to in the contract.

Concerning visits to Tennessee by Ferrostaal employees, there is a conflict as noted by the District Court:

A Sun Coke representative, Alison Grant, reports that Ferrostaal employees visited Tennessee on several occasions. Specifically, Marco Antonio Marcial, Villian Oliverira, Renata Souza, and Marcos Daré visited Tennessee in July 2001; Joern Walter and Jan Krull visited Tennessee in November 2001; and Howard Barnes, Helmut Kucken, Marco Antonio Marcial, and Jan Krull visited Tennessee in September 2002. Ms. Grant does not know which of these Ferrostaal representatives were from Ferrostaal Germany. Ferrostaal Germany asserts that representatives from Ferrostaal Germany were only present in Tennessee during the September 2002 visit. Additionally, Ms. Grant states that there were multiple phone conversations and email messages from Ferrostaal Germany to Sun Coke employees in Knoxville to arrange meetings.

Sun Coke v. MAN Ferrostaal Do Brasil Commercio E Industria Ltda., 543 F.Supp.2d 836, 838 (E.D.Tenn.2008) (citations omitted). There is no conflict concerning the fact that the confidential trade information, which related to "heat recovery Coke oven technology," was sent by SunCoke in Tennessee to Ferrostaal in Essen, Germany, its headquarters. The information was sent by computer network and website.

By 2005, SunCoke believed that Ferrostaal was improperly disclosing its protected information to third parties and had improperly put on its website a photograph showing its "proprietary designs." In October 2005, SunCoke filed an arbitration proceeding in Paris and demanded that all of its confidential information be returned to it. In late 2005, during the pendency of the arbitration proceeding, a high executive of Ferrostaal, Dr. Wolfgang Knothe, traveled to Knoxville for discussions concerning the return of the information and the settlement of their dispute with Mr. M.H.R. Dingus, the president of SunCoke. The principals of the two companies then exchanged letters. Dr. Knothe's letter says that they had settled the controversy in their Knoxville meeting.⁴ Mr. Dingus's reply responds that the parties must take further steps to implement the understanding arrived at in the Knoxville meeting.⁵

The District Court describes the activities of the parties thereafter as follows:

On April 21, 2006, Sun Coke again requested that Ferrostaal return of its [sic] confidential information as defined in the MOU and confidentiality agreement and requested that Ferrostaal remove all depictions of Sun Coke's proprietary designs from its website. By cover letters dated September 1, 2006, March 9, 2007, and September 17, 2007, Ferrostaal Germany returned some of the information that it had received from Sun Coke. Ferrostaal Germany invited Sun Coke to call if there were any questions about the return of the information, but Sun Coke has never contacted Ferrostaal Germany to verify or discuss the return of any of the information.

On January 8, 2007, Sun Coke filed the instant action requesting that Ferrostaal be required to (1) return the proprietary information; (2) certify it has done so and describe the means taken to assure no copies have been retained, nor other improper uses made of the proprietary information; and (3) permit Sun Coke access to Ferrostaal's Essen headquarters and Brazilian offices to confirm all proprietary information has been returned.

Sun Coke, 543 F.Supp.2d at 839 (citations omitted).

II.

In deciding this case against jurisdiction, the District Court relied heavily on an intellectual property case in which a Michigan company sued a Swiss company for misappropriation of confidential information released under a contract negotiated in Switzerland—a contract which expressly provided that "jurisdiction for this contract is Bern, Switzerland." Int'l Tech. Consultants, Inc. v. Euroglas S.A., 107 F.3d 386 (6th Cir.1997). Relying on language from a Supreme Court case interpreting International Shoe to allow "potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit," World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), the International Technologies court held that the forum-selection clause establishing jurisdiction in Bern, Switzerland, was strong evidence that Michigan lacked a substantial basis for jurisdiction against the Swiss company. In the present case, instead of limiting jurisdiction to a court in Essen, Germany, and foreclosing jurisdiction elsewhere, the contract between SunCoke and Ferrostaal allows equity jurisdiction enjoining misuse of intellectual property in any court of "competent jurisdiction." This means any court in which the "connection" with the dispute is sufficient to satisfy the standard of "fair play and substantial justice."⁶

The District Court also erroneously foreclosed the use of the late-2005 discussion in Knoxville which led to the exchange of correspondence and the alleged agreement between the principals of the two companies regarding the return of SunCoke's confidential information. Based on language from Nationwide Mutual Insurance Co. v. Tryg International Insurance Co., 91 F.3d...