Thursday, January 31, 2008

Tenth Circuit Reverses DCT Dismissal for Lack of Personal Jurisdiction, Finding Minimum Contacts over Foreign Defendants

Per AST Sports Science, Inc. v. CLF Distribution Ltd., --- F.3d ----, 2008 WL 217722 (10th Cir. Jan. 28, 2008):

Plaintiff, AST Sports Science, Inc. (AST) sued defendants, CLF Distribution Limited (CLF) and Robin Holiday, claiming they failed to pay for products received from AST. AST alleged breach of contract, breach of implied contract, unjust enrichment, and fraud in the inducement. . . . AST and CLF are in the business of selling health, nutrition, and vitamin products. AST is a Colorado corporation with its principal place of business in Golden, Colorado. Paul Delia is its president. CLF is a corporation established under the laws of Great Britain, with its principal place of business in Wiltshire, Great Britain. Robin Holiday is the president of CLF.

AST and Mr. Delia claim that they entered into an Exclusive Right to Distribute Agreement (“Agreement”) with CLF in 1999, executed by Mr. Holiday. The Agreement gave CLF the exclusive right to distribute AST products in Europe. . . . The complaint alleges CLF is indebted to AST for the principal amount of $194,259.27 for nonpayment of orders placed in 2002, 2004, and 2005.

. . .

A contract alone does not subject a nonresident defendant to the jurisdiction of the subject forum, Benton, 375 F.3d at 1077 (citing Burger King, 471 U.S. at 473), but AST presents several additional facts in support of jurisdiction. Especially significant to our analysis is the fact that Mr. Holiday approached Mr. Delia about becoming AST's European distributor, and then formed an ongoing business relationship to facilitate the same. Phone calls, letters, facsimiles, and emails “provide additional evidence that [the foreign defendant] pursued a continuing business relationship with [the plaintiff].” Pro Axess v. Orlux Distrib., Inc., 428 F.3d 1270, 1278 (10th Cir.2005); see also Benton, 375 F.3d at 1077 (correspondence exchanged is evidence of pursuit of business relationship). These modern communications can eliminate the need for physical presence.

. . .

Here we have Mr. Holiday's physical presence in Colorado in at least 1999. After that, the evidence clearly demonstrates-even at the motion to dismiss stage-that he continued the business relationship he began when he solicited AST's European distributorship. As is required for a finding of minimum contacts, the record reveals that the parties pursued a continuous course of dealing involving CLF placing orders to AST from England by phone, facsimile, or email. From Colorado, AST would, in turn, fill the order and ship it to England. From England, CLF would compensate AST for the product shipped. Taken together, these circumstances constitute a business relationship, lasting over a period of seven years, that include “prior negotiations and contemplated future consequences, along with the ... parties' actual course of dealing.” Burger King, 471 U.S. at 479 (1985). Quite simply, defendants reached out to become AST's European distributor, the relationship was allegedly memorialized in a contract, and the relationship lasted for a over a period of seven years. It should not be a surprise to defendants that this continuing relationship and the resulting obligations to plaintiff subjects them to regulations and sanctions in Colorado for the consequences of their alleged activities. See id. at 473. “[T]he Due Process Clause may not readily be wielded as a territorial shield to avoid interstate obligations that have been assumed.” Id. at 474. We are persuaded that defendants' contacts with the state provided fair warning to them that they were receiving the benefits and protections of Colorado's laws and were therefore subject to be brought before its courts.


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