Toro Co. v. Ballas Liquidating Co.

• Decision Date: 29 March 1978
• Docket Number: No. 77-1686,77-1686
• Parties: 1978-1 Trade Cases 61,942 The TORO COMPANY and Toro Sales Company, Plaintiffs, Appellants, v. BALLAS LIQUIDATING COMPANY and Weed Eater, Inc., Defendants, and H. Spencer Stone Associates, Inc., Defendant, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1267

572 F.2d 1267

1978-1 Trade Cases 61,942

The TORO COMPANY and Toro Sales Company, Plaintiffs, Appellants, v. BALLAS LIQUIDATING COMPANY and Weed Eater, Inc., Defendants, and H. Spencer Stone Associates, Inc., Defendant, Appellee.

No. 77-1686.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 12, 1978.

Decided March 29, 1978.

Eugene M. Warlich, Doherty, Rumble & Butler, St. Paul, Minn., for appellant; Alan I. Silver, St. Paul, Minn., on the brief.

James H. Lehmann, Jr., Houston, Tex., for appellee; Green & Sims, Houston, Tex., on the brief.

Before GIBSON, Chief Judge, VAN OOSTERHOUT, Senior Circuit Judge, and ROSS, Circuit Judge.

ROSS, Circuit Judge.

The Toro Company and Toro Sales Company (herein referred to jointly as Toro) bring this interlocutory appeal from an order of the district court dismissing, for want of personal jurisdiction, Toro's complaint as against H. Spencer Stone Associates, Inc., d/b/a International Marketing Associates (IMA). We agree with the district court that application of the Minnesota long arm statute to acquire jurisdiction over the defendant in this case would be unconstitutional and, therefore, we affirm the order of dismissal.

I.

The Toro Company is a Minnesota corporation engaged in the manufacture and sale of lawnmowers, tractors and other lawn and garden products. Toro Sales Company is a wholly owned subsidiary of The Toro Company. Through its own sales divisions and through arrangements with independent contractors, Toro Sales Company acts as a wholesale distributor of Toro and other manufacturers' products.

IMA is a Texas corporation whose business consists primarily of assisting manufacturers and assembly companies in developing markets for their products. In 1972 IMA entered into an agreement with Weed Eater, Inc., ¹ whereby IMA was to act as the exclusive sales agent for Weed Eater products. Pursuant to this agreement IMA and its president, H. Spencer Stone, established a nationwide network of distributors for Weed Eater products; ten sales regions were created, each having a regional manager responsible to Stone. In the New York, Los Angeles and San Francisco areas, IMA chose to distribute the Weed Eater products through local sales divisions of Toro.

IMA continued to act as a marketing agent for Weed Eater, Inc., from 1972 through mid-1976. ² During that period the New York division of Toro was terminated as a distributor for Weed Eater products; it was this action which precipitated the instant lawsuit against IMA. ³ Toro's complaint alleges that termination of its New York division was, among other things, part of an unlawful conspiracy between IMA and the other named defendants to initiate a boycott of Toro products, in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2.

Seeking to sustain jurisdiction over IMA in a Minnesota forum, Toro introduced evidence showing that IMA had conducted activities in Minnesota under its agreement with Weed Eater, Inc. Throughout the term of this agreement, IMA's regional sales director for the area which included Minnesota would call upon and visit local distributors of Weed Eater products to assist the distributors in their sales efforts. The district court found that in the one year period preceding initiation of this lawsuit, approximately $400,000 worth of Weed Eater products were sold in the Minnesota market.

On the facts as above stated, the district court concluded (1) that IMA's activities in Minnesota fell within the literal provisions of that state's long arm statute, but that (2) maintenance of suit against IMA in a Minnesota forum would offend traditional notions of fair play and substantial justice. Toro's complaint against IMA was dismissed accordingly.

II.

We note at the outset two propositions about which there is no dispute. First, it is clear that Minnesota's long arm statutes, Minn.Stat.Ann. §§ 303.13 and 543.19, authorize the assertion of jurisdiction over foreign corporations to the fullest extent allowed by constitutional due process. Northern States Pump & Supply Co. v. Baumann, Minn., 249 N.W.2d 182, 184 (1976); American Pollution Prevention Co. v. National Alfalfa Dehydrating & Milling Co., 304 Minn. 191, 193, 230 N.W.2d 63, 65, cert. denied, 423 U.S. 894, 96 S.Ct. 193, 46 L.Ed.2d 126 (1975). Second, it is likewise clear that Toro's cause of action did not arise out of IMA's activities in the state of Minnesota. We are therefore presented with the single question whether, on the record before us, Minnesota may constitutionally assert jurisdiction over a foreign corporation whose only connections with that state are wholly unrelated to the claim sued upon. We conclude that it may not.

In reaching this conclusion, we begin with the premise that "all assertions of state court jurisdiction must be evaluated according to the standards set forth in International Shoe (Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945),) and its progeny." Shaffer v. Heitner, 433 U.S. 186, 212, 97 S.Ct. 2569, 2584, 53 L.Ed.2d 683 (1977). We thus consider whether IMA's activities in the state of Minnesota are such as to make it reasonable "to require the corporation to defend the particular suit which is brought there." International Shoe, supra, 326 U.S. at 317, 66 S.Ct. at 158.

Since International Shoe, the "central concern of the inquiry into personal jurisdiction" has been "the relationship among the defendant, the forum, and the litigation." Shaffer v. Heitner, supra, 433 U.S 186, 204, 97 S.Ct. at 2580. This court has considered five factors as being especially significant in characterizing that relationship in a given situation: (1) the quantity of the defendant's contacts with the forum state, (2) the nature and quality of those contacts, (3) the relationship between the cause of action and the contacts, (4) the interest of the state in providing a forum for the litigation, and (5) the convenience of the parties. See Aaron Ferer & Sons Co. v. American Compressed Steel Co., 564 F.2d 1206, 1209 (8th Cir. 1977), and cases cited therein.

Just as frequently, we have stressed that application of these factors does not provide a slide rule by which fundamental fairness can be ascertained with mathematical precision. For instance, we have said that the first three of the factors listed are of "primary" concern in deciding whether jurisdiction may reasonably be asserted, and that the last two are of only "secondary" importance. See, e. g., Gardner Engineering Corp. v. Page Engineering Co., 484 F.2d 27, 31 (8th Cir. 1973); Thompson v. Ecological Science Corp., 421 F.2d 467, 469 (8th Cir. 1970).

Having said this, we are met with Toro's assertion that any one or more of the five enumerated factors need not be present at all to sustain jurisdiction in a particular case. Thus, Toro argues, the absence of any connection between its cause of action...