BECKER,*fn1 Stapleton, Circuit Judges, and Pollak, District Judge.*fn2
The opinion of the court was delivered by: Becker, Chief Judge
On Appeal From the United States District Court For the District of New Jersey (D.C. Civ. No. 96-cv-05881)
This is a long arm service of process case which requires us, for the first time, to apply the Supreme Court's decision in Calder v. Jones, 465 U.S. 783 (1984), to a business tort. It comes before us on the appeal of the plaintiff, Imo Industries Inc. ("Imo"), a multinational corporation with its principal place of business in New Jersey, from an order of the district court dismissing its action pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction over defendant Kiekert AG ("Kiekert"), a German corporation. The complaint alleges that Kiekert tortiously interfered with Imo's attempt to sell its wholly-owned Italian subsidiary to a French corporation that was one of Kiekert's competitors. The asserted mechanism by which the tort was accomplished was a series of letters sent by Kiekert to the Italian subsidiary and to the New York investmentfirm of C.S. First Boston, Imo's representative in the sale, threatening that Kiekert would revoke the licensing agreement it had with the subsidiary if the deal went through. According to Imo, the sale was never consummated because of these threats, causing it considerable loss.
Imo contends that personal jurisdiction over Kiekert was proper based upon its contacts with Imo in New Jersey and upon Kiekert's claimed commission of an intentional tort, the effects of which were allegedly felt by Imo in New Jersey. Because we conclude that Kiekert's contacts with the forum would not otherwise satisfy the requirements of due process, the question whether personal jurisdiction can be exercised here depends upon the applicability to the facts of Calder, in which the Supreme Court found personal jurisdiction to be proper over nonresident defendants that committed an intentional tort outside the forum, the unique effects of which caused damage to the plaintiff within the forum. We believe that for Calder to apply, the plaintiff must allege facts sufficient to meet a three-prong test. First, the defendant must have committed an intentional tort. Second, the plaintiff must have felt the brunt of the harm caused by that tort in the forum, such that the forum can be said to be the focal point of the harm suffered by the plaintiff as a result of the tort. Third, the defendant must have expressly aimed his tortious conduct at the forum, such that the forum can be said to be the focal point of the tortious activity.
Applying this test to the present facts, we conclude that personal jurisdiction does not exist here since Imo has not pointed to sufficient facts demonstrating that Kiekert "expressly aimed" its tortious conduct at New Jersey. To the contrary, the focus of the dispute -- i.e. the proposed sale of an Italian company to a French company and a claim of rights by a German company pursuant to a license agreement apparently governed by German law -- and the alleged contacts by Kiekert (i.e., its correspondence) all appear to be focused outside the forum. The order of the district court will therefore be affirmed.
I. Facts and Procedural History
For purposes of this appeal, we accept the plaintiff 's allegations as true. See Carteret Savings Bank, FA v. Shushan, 954 F.2d 141, 142 (3d Cir. 1992) (holding that an appellate court reviewing an order of the district court dismissing a case for lack of personal jurisdiction"must accept all of the plaintiff 's allegations as true and construe disputed facts in favor of plaintiff.") (citing In re Arthur Treacher's Franchisee Litigation, 92 F.R.D. 398, 409-10 (E.D. Pa. 1981)). However, the plaintiff bears the burden of proving that personal jurisdiction is proper. Carteret Savings Bank, 954 F.2d at 146 (Once a defendant raises the defense of lack of personal jurisdiction, "the plaintiff bears the burden to prove, by a preponderance of evidence, facts sufficient to establish personal jurisdiction.") (citing Time Share Vacation v. Atlantic Resorts, Ltd., 735 F.2d 61, 65 (3d Cir. 1984)).
Defendant Kiekert, a manufacturer of automobile door latch systems, is a corporation organized, existing under the laws of, and having its principal place of business in the Federal Republic of Germany. Kiekert sells its products world-wide, though only 2% of its sales derive from the United States market.*fn3 According to Kiekert, it does not now engage, nor has it ever engaged in any of the following activities in New Jersey:
"the manufacture of any products; any direct sales; solicitation or advertisement to sell its products; any shipment of merchandise directly into or through the state, or the supply of services there; the maintenance of an office, a mailing address, a telephone number, or a bank account; the ownership of any real or personal property; the employment of any employees or agents; or the requirement of or payment of taxes." Appellee's Br. at 4. Imo does not appear to dispute these claims.
Plaintiff Imo, a multinational corporation, is incorporated in Delaware with its principal place of business in Lawrenceville, New Jersey. Imo has 22 manufacturing facilities around the world, including plants in Germany, the United Kingdom, France and Australia. Approximately 90% of Imo's products are marketed outside of the United States, and approximately 34% of Imo's total net sales for 1995 were in these foreign markets. Most relevant to the present case is the fact that Imo owns all of the shares of an Italian company, Roltra Morse, S.p.A. ("Roltra"), which manufactures automobile door latches using technology licensed from Kiekert. The licensing agreement was negotiated in Germany and Italy in 1993 and it provides that the agreement shall be governed by German law. Imo was not a party to this licensing agreement and did not participate in the negotiation or execution thereof.
In December 1995, Imo decided to sell its shares in Roltra and retained the New York investment firm of C.S. First Boston Corporation ("First Boston") to act as its representative. On Imo's behalf, First Boston solicited bids from corporations interested in acquiring Imo's shares of Roltra. Valeo, S.A. ("Valeo"), a French corporation and one of Kiekert's competitors, submitted a bid of $72 million for the shares. Kiekert also submitted a bid, though for only $30 million. Imo and Valeo thereafter proceeded to prepare final agreements to close the sale of Roltra's stock for $69 million, and Kiekert was notified on or about June 12, 1996, that its bid was insufficient.
Shortly thereafter, and prior to closing, Kiekert sent a letter to First Boston in New York stating that, under its agreement with Roltra, Kiekert had the right to revoke its license for the door latch technology if Roltra's shares were sold to one of its competitors. More specifically, the letter to First Boston, dated June 17, 1996, stated in pertinent part that "Kiekert's license and patents . . . cannot be transferred if [Roltra] is taken over by one of our competitors" and if this occurs, Kiekert "would have to retire [its] acceptance of production for these products immediately which are manufactured under our license."
The import of such an action was clear -- if the license was revoked, Roltra's value as a going concern would be severely impacted. In addition, Kiekert wrote to Roltra in Italy on July 8, 1996, similarly stating Kiekert's intent to terminate the licensing agreement if Roltra's shares were sold to a competitor.
First Boston forwarded the June 17 letter to Imo in New Jersey. Imo responded directly to Kiekert by letter dated July 9, 1996, stating its position that Kiekert was"not entitled by contract or law to rescind or otherwise terminate the License Agreement in the event of sale of the shares to any third party." Imo demanded "that [Kiekert] cease and desist from making such statements to any third party," and advised that if it "continue[s] to make such statements [it] . . . will be held responsible for all damages that [Roltra] and/or its shareholders suffer from such representations." Roltra also forwarded the July 8 letter to Imo in New Jersey. Imo again responded directly to Kiekert by letter dated August 12, stating that its "tortious and illegal conduct is seriously jeopardizing [our] ability to close this transaction," and that "unless you immediately withdraw your threats of termination, we are prepared tofile lawsuits in all appropriate jurisdictions, including the United States . . ."
In addition to the mail contacts, Kiekert officials in Germany and Imo officials in New Jersey spoke twice by telephone during this time concerning the license agreement. The record reveals that representatives of Imo initiated these calls. See Appellant's Br. at 21. Finally, Imo requested meetings with Kiekert in an attempt to resolve the matter. One such meeting was held in Toronto on August 27, 1996, and two more were held on September 10 of that year in Germany. These Discussions apparently failed to persuade Kiekert to change its position.
On October 28, 1996, Valeo advised Imo of its withdrawal from negotiations concerning the sale of Roltra's shares. By letter, it informed Imo that "[w]e have concluded that, irrespective of the likelihood that Kiekert's position would prevail, Kiekert's position regarding its license can be expected to have a disruptive impact on the business of Roltra . . . and in particular create disturbances with customers during the period of any litigation."
Imo thereafter sued in the District Court for the District of New Jersey, alleging that Kiekert's actions constituted tortious activity and caused significant damage to it in New Jersey. Subject matter jurisdiction was premised on diversity of citizenship. See 28 U.S.C.§ 1332. According to Imo, Valeo's decision to break off the contract negotiations was directly caused by Kiekert's steadfast assertion of its intent to revoke its license if the proposed sale was consummated. As a result, Imo alleges that it has suffered injuries in numerous forms due to its inability to consummate the deal. First, Imo alleges that the sale to Valeo would have resulted in a profit of more than $20 million. Second, Imo submits that, because of its inability to sell the Roltra shares, it has been forced to reclassify Roltra as a continuing operation, with a concomitant restatement of its third quarter earnings. This has allegedly resulted in the reversal of a favorable $10 million tax benefit based on the anticipated sale, the recognition of $4.8 million in previously deferred 1996 losses relating to Roltra, liabilities for banking and legal fees, as well as the diminution of Roltra's stock value. See Appellant's Br. at 9.
Kiekert moved to dismiss Imo's action for lack of personal jurisdiction, contending that it did not have the requisite minimum contacts with New Jersey to sustain jurisdiction in that forum. The district court granted the motion. We review de novo the district court's dismissal for lack of personal jurisdiction. Vetrotex Certainteed Corp. v. Consolidated Fiber Glass Products Co., 75 F.3d 147, 150 (3d Cir. 1996) ("Whether personal jurisdiction may be exercised over an out-of-state defendant is a question of law, and this court's review is therefore plenary."); Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990).
II. Due Process Limits on the Exercise of Personal Jurisdiction
The fundamental principles of long arm jurisdiction are extremely familiar and, since they have been repeated countless times in the jurisprudence, little will be served by rescribing them at any length here. In brief, to exercise personal jurisdiction over a defendant, a federal court sitting in diversity must undertake a two-step inquiry. First, the court must apply the relevant state long-arm statute to see if it permits the exercise of personal jurisdiction; then, the court must apply the precepts of the Due Process Clause of the Constitution. In New Jersey, this inquiry is collapsed into a single step because the New Jersey long-arm statute permits the exercise of personal jurisdiction to the fullest limits of due process. See DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981). This being the case, the New Jersey Supreme Court has made it clear that New Jersey courts look to federal law for the interpretation of the limits on in personam jurisdiction. Mesalic v. Fiberfloat Corp., 897 F.2d 696, 698 n.5 (3d Cir. 1990).
Personal jurisdiction under the Due Process Clause depends upon "the relationship among the defendant, the forum, and the litigation." Shaffer v. Heitner, 433 U.S. 186, 204 (1977). Physical presence within the forum is not required to establish personal jurisdiction over a nonresident defendant. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). Instead, the plaintiff must show that the defendant has purposefully directed its activities toward the residents of the forum state, see id. at 472, or otherwise "purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." See Hanson v. Denckla, 357 U.S. 235, 253 (1958).
Where, as here, the plaintiff 's cause of action is related to or arises out of the defendant's contacts with the forum, the court is said to exercise "specific jurisdiction." See Helicopteros Nacionales de Columbia, S.A. v. Hall , 466 U.S. 408, 414 n.8 (1984).*fn4 In order for specific jurisdiction to be properly exercised under the Due Process Clause, the plaintiff must satisfy a two-part test. First, the plaintiff must show that the defendant has constitutionally sufficient "minimum contacts" with the forum. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985). Second, for jurisdiction to be exercised the court must determine, in its discretion, "that to do so would comport with`traditional notions of fair play and substantial Justice.' " See Vetrotex, 75 F.3d at 150-51 (citing International Shoe Co. v. Washington, 326 U.S. 310 (1945)). Although this case raises some interesting issues regarding the application of the "fair play and substantial Justice" standard, we need not reach them since, as we discuss below, Imo has not met its burden of demonstrating Kiekert's minimum contacts with the forum.
We note initially that specific jurisdiction will not lie here on the basis of Kiekert's alleged contacts with the forum alone, for (as we detail in the margin) they are far too small to comport with the requirements of due process. *fn5 Since
(Text continued on page 11) Stover v. O'Connell Associates, Inc., 84 F.3d 132, 137 (4th Cir.), cert. denied ___ U.S. ___, 117 S. Ct. 437 (1996) ("Ordering a product or service by telephone from a company in a different state does not subject the customer to that state's jurisdiction."); Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1077 (10th Cir. 1995) ("It is well-established that phone calls and letters are not necessarily sufficient in themselves to establish minimum contacts."); Reynolds v. Int'l Amateur Athletic Fed., 23 F.3d 1110, 1119 (6th Cir. 1994) ("The use of interstate facilities such as the telephone and mail is a secondary or ancillary factor and cannot alone provide the minimum contacts required by due process.") (quoting Scullin Steel Co. v. National Railway Utilization Corp., 676 F.2d 309, 314 (8th Cir. 1982) (internal quotation marks omitted)); Cote v. Wadel, 796 F.2d 981, 984 (7th Cir. 1986) (finding insufficient a "handful" of letters and phone calls exchanged between plaintiff and defendant).
In the present case, not only are the communications limited in quantity, but there is not even one direct act of"entry" into New Jersey by Kiekert -- the letters were sent to Italy and New York, the phone calls were placed by Imo itself, and the meetings were held in Canada and Germany. While in some cases there might be merit to the argument that correspondence sent to a third-party outside the forum which foreseeably would wind up within the forum could weigh in favor of a finding of specific jurisdiction being properly exercised, in the present case we are not persuaded that the Kiekert letters provide such weight. The same must be said for the two phone calls, which strike us as purely unilateral conduct by Imo. See Hanson, 357 U.S. at 253 ("[T]he unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.").
There is also an aspect of foreseeability that we believe is missing in this case. The Supreme Court has concluded that"foreseeability alone has never been a sufficient benchmark for personal jurisdiction under the Due Process Clause . . . . [T]he foreseeability that is critical to due process analysis is . . . . that 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 Corp. v. Woodson, 444 U.S. 286, 295-97 (1980) (internal quotation marks omitted). We do not believe that it was reasonably foreseeable to Kiekert that its connection with New Jersey was such that that it should reasonably have anticipated being haled into court there. From Kiekert's perspective, it entered into a License Agreement with an Italian company in Germany, which was to be governed by German law. Imo took no part at all in these contract negotiations. It was perfectly reasonable,
this is an intentional tort case, we must consider whether the application of Calder v. Jones, supra, can change the outcome. Generally speaking, under Calder an intentional tort directed at the plaintiff and having sufficient impact upon it in the forum may suffice to enhance otherwise insufficient contacts with the forum such that the "minimum contacts" prong of the Due Process test is satisfied. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 780 (1984). We therefore concentrate our minimum contacts Discussion below on the Calder test.
III. The Import of Calder v. Jones
In Calder, entertainer Shirley Jones brought an action in California against the author and editor of an article which had appeared in the National Enquirer, and which she claimed was defamatory. The article alleged that Jones had a problem with alcohol which prevented her from fulfilling her professional obligations. Although the Enquirer was distributed nationally, it had its largest circulation in California. Defendant South, the reporter, did most of his research in Florida, relying on phone calls to California for information. Defendant Calder had no such contacts with California. He reviewed and approved the initial evaluation of the topic of the article and edited drafts to itsfinal form.
See id. at 785-86. Both defendants, residents of Florida, moved to dismiss Jones' suit for lack of personal jurisdiction.
The Court found that the exercise of personal jurisdiction over the defendants was proper. The Court concluded:
The allegedly libelous story concerned the California activities of a California resident. It impugned the professionalism of an entertainer whose television career was centered in California. The article was drawn from California sources, and the brunt of the harm, in terms of both respondent's emotional distress and the injury to her professional reputation, was suffered in California. In sum, California is the focal point both of the story and of the harm suffered. Jurisdiction over petitioners is therefore proper in California based on the "effects" of their Florida conduct in California. . . . [T]heir intentional, and allegedly tortious, actions were expressly aimed at California. Petitioner South wrote and petitioner Calder edited an article that they knew would have a potentially ...