Lovett v. Sanderson ( 1999 )


Menu:
  •               IN THE UNITED STATES COURT OF APPEALS
                          FOR THE FIFTH CIRCUIT
    
    
    
                                 No. 98-30290
    
    
    SANDRA LOVETT, TERRY HAWK, RICHARD A. THRAILKILL,
    
                                          Plaintiffs/Appellees,
    
    versus
    
    MICHAEL G. SANDERSON, ET AL.,
    
                                          Defendants,
    
    MILLIKEN & MICHAELS OF ARIZONA, INC., incorporated in Arizona,
    with its principal place of business in Tucson, Arizona; MILLIKEN
    & MICHAELS OF DELAWARE, INC., a Delaware corporation with its
    principal place of business in Dover, Delaware; MILLIKEN &
    MICHAELS OF NORTH CAROLINA, INC., a North Carolina corporation
    with its principal place of business in Boone, North Carolina;
    MILLIKEN & MICHAELS OF OREGON, INC., an Oregon corporation with
    its principal place of business in Beaverton, Oregon, a sales
    office only; MILLIKEN & MICHAELS OF COLORADO, INC., a Colorado
    corporation and a sales office only; MILLIKEN & MICHAELS OF
    TEXAS, INC., a Texas corporation,
    
                                          Defendants/Appellants.
    
                           - - - - - - - - - -
              Appeal from the United States District Court
                  for the Eastern District of Louisiana
                               (94-CV-3380)
                           - - - - - - - - - -
    
                                 June 18, 1999
    
    Before KING, Chief Judge, and REAVLEY and BENAVIDES, Circuit
    Judges.
    
    BENAVIDES, Circuit Judge:*
    
         Six Defendants appeal the district court’s decision to
    
    exercise personal jurisdiction over them. We REVERSE.
    
    
         *. Pursuant to 5TH CIR. R. 47.5, the court has determined
    that this opinion should not be published and is not precedent
    except under the limited circumstances set forth in 5TH CIR.
    R. 47.5.4.
         The named Plaintiffs brought suit in the United States
    
    District Court for the Eastern District of Louisiana against
    
    twelve Defendant entities, including the Appellants here,1
    
    alleging that the Defendants failed to pay them and similarly
    
    situated employees overtime wages as required by the Fair Labor
    
    Standards Act (“FLSA”), 29 U.S.C. §§ 201-219. The Appellants,
    
    three full-service corporations and three sales-office
    
    corporations,2 are each incorporated outside Louisiana. The
    
    Appellants moved to dismiss for failure of personal jurisdiction
    
    or, in the alternative, for transfer on the ground of forum non
    
    conveniens. The case was referred to a magistrate judge, who
    
    recommended that the district court grant the motion to dismiss for
    
    lack of personal jurisdiction.   The Plaintiffs filed objections to
    
    the recommendation, producing evidence regarding the control that
    
    Michael G. Sanderson, a Louisiana resident and the sole shareholder
    
    of each Defendant corporation, exercised over the Appellants’
    
    
         1. The remaining six Defendants do not challenge the
    district court’s exercise of jurisdiction over them. Those
    Defendants are all Louisiana residents or corporations: Michael G.
    Sanderson, a Louisiana resident and the sole shareholder of each
    Defendant corporation; Patricia Downing Sanderson, a Louisiana
    resident; Milliken & Michaels, Inc., a Louisiana corporation;
    Milliken & Michaels of Louisiana, Inc., a Louisiana corporation;
    Milliken & Michaels Receivables Management, Inc., a Louisiana
    corporation; and Milliken & Michaels Credit Services, Inc., a
    Louisiana corporation.
         2. Three Appellants maintain and service their own client
    bases. Those Appellants (the “full-service Appellants”) are
    Milliken & Michaels of Arizona, Inc.; Milliken & Michaels of
    Delaware, Inc.; and Milliken & Michaels of North Carolina, Inc.
    Three Appellants serve only as sales offices generating accounts
    to be collected by Milliken & Michaels Receivables Management,
    Inc. Those Appellants (the “sales-office Appellants”) are Milliken &
    Michaels of Oregon, Inc.; Milliken & Michaels of Colorado, Inc.;
    and Milliken & Michaels of Texas, Inc.
    
                                     -2-
    policies with respect to employment and overtime pay. The district
    
    court found that the Plaintiffs established a prima facie case of
    
    sufficient contacts between the Appellants and Louisiana. The court
    
    therefore held that it could exercise personal jurisdiction over all
    
    the Defendants without offending due process.
    
         When a nonresident defendant presents a motion to dismiss
    
    for lack of personal jurisdiction, the plaintiff bears the burden
    
    of establishing that the court has jurisdiction. See Wilson v.
    
    Belin, 
    20 F.3d 644
    , 648 (5th Cir. 1994) (citing Stuart v.
    
    Spademan, 
    772 F.2d 1185
    , 1192 (5th Cir. 1985)). In the case at
    
    bar, the magistrate judge and the district court reviewed the
    
    plaintiffs’ and defendants’ submissions and heard oral arguments
    
    but did not conduct evidentiary hearings. When no evidentiary
    
    hearing is held, the plaintiff, in order to bear its burden, need
    
    only present a prima facie case that jurisdiction is proper. See
    
    id. (citing Thompson v. Chrysler Motors Corp., 
    755 F.2d 1162
    ,
    
    1165 (5th Cir. 1985)). In determining whether a prima facie case
    
    for personal jurisdiction exists, the court must resolve factual
    
    conflicts in the plaintiff’s favor. See id. (citing Bullion v.
    
    Gillespie, 
    895 F.2d 213
    , 215 (5th Cir. 1990)). We review de novo
    
    the district court’s legal decision to exercise personal
    
    jurisdiction, see id. at 647-48 (citing Bullion, 895 F.2d at
    
    216), using the same standards employed by the district court.
    
         The path for a district court to follow in deciding whether
    
    to exercise personal jurisdiction over an out-of-state defendant
    
    in a federal-question case is well-trodden and clear. The court
    
    
                                   -3-
    must look first to the service-of-process provisions of the
    
    federal statute from which the case arises. See Omni Capital
    
    International v. Rudolf Wolff & Co., 
    484 U.S. 97
    , 105-06, 108 S.
    
    Ct. 404, 410 (1987). When the statute is silent as to service of
    
    process, as the FLSA is, see 29 U.S.C. § 216; Aviles v. Kunkle,
    
    
    978 F.2d 201
    , 203-04 (5th Cir. 1992), the federal court may reach
    
    those entities that are subject to the jurisdiction of the state
    
    in which the district court sits. See Fed. R. Civ. P. 4(e); Point
    
    Landing, Inc. v. Omni Capital International, Ltd., 
    795 F.2d 415
    ,
    
    419 (5th Cir. 1986), aff’d sub nom. Omni Capital International,
    
    Ltd. v. Rudolf Wolff & Co., 
    484 U.S. 97
    , 
    108 S. Ct. 404
     (1987).
    
    Louisiana’s long-arm statute permits its state courts to exercise
    
    jurisdiction over nonresident aliens to the full limits allowed
    
    by constitutional due process. See La. Rev. Stat. Ann.
    
    § 13:3201(B) (West 1999); Dalton v. R&W Marine, Inc., 
    897 F.2d 1359
    , 1361 (5th Cir. 1990). Our analysis thus amounts to an
    
    inquiry into whether the district court’s exercise of
    
    jurisdiction comports with constitutional due process
    
    requirements. See id.
    
         Constitutional due process principles permit a court to
    
    exercise jurisdiction over a nonresident defendant when that
    
    defendant has established sufficient “minimum contacts” with the
    
    forum state and the exercise of jurisdiction does not offend
    
    “traditional notions of fair play and substantial justice.”
    
    Burger King Corp. v. Rudzewicz, 
    471 U.S. 462
    , 476, 
    105 S. Ct. 2174
    , 2184 (1985). A court considers five factors in assessing
    
    
                                   -4-
    whether its exercise of jurisdiction meets the fairness prong of
    
    the due process inquiry: (1) the burden upon the nonresident
    
    defendant to litigate in that forum; (2) the forum state’s
    
    interests in the matter; (3) the plaintiff’s interest in securing
    
    relief; (4) the interstate judicial system’s interest in
    
    obtaining the most efficient resolution of controversies; and (5)
    
    the several states’ shared interest in furthering substantive
    
    social policies. See Asahi Metal Industry Co. v. Superior Court,
    
    
    480 U.S. 102
    , 113, 
    107 S. Ct. 1026
    , 1033 (1987).
    
         Minimum contacts may be established under a theory of
    
    specific jurisdiction or under a theory of general jurisdiction.
    
    See, e.g., Felch v. Transportes Lar-Mex Sa De Cv, 
    92 F.3d 320
    ,
    
    324 (5th Cir. 1996) (quoting Wilson, 20 F.3d at 746). Specific
    
    jurisdiction exists when a plaintiff’s claim arises out of a
    
    foreign defendant’s specific activity within the forum state.
    
    Although the “specific activity” may be a single act, see, e.g.,
    
    Bullion, 895 F.2d at 216, the foreign defendant must have
    
    purposely undertaken the in-state activity; it may not be a
    
    consequence of the plaintiff’s unilateral action. See, e.g.,
    
    Bearry v. Beech Aircraft Corp., 
    818 F.2d 370
    , 374 (5th Cir.
    
    1988). General jurisdiction exists when a foreign defendant’s
    
    contacts with a state have been “continuous and systematic.” See,
    
    e.g., id. General jurisdiction may attach in the absence of
    
    specific jurisdiction, see id., and the forum state need not have
    
    a direct interest in the action in order to exercise general
    
    jurisdiction. See, e.g., Felch, 92 F.3d at 326.
    
    
                                   -5-
         Applying these standards to the case at bar, the district
    
    court concluded that it could properly exercise personal
    
    jurisdiction over the Appellants.
    
         The court found that specific jurisdiction existed because
    
    Michael Sanderson, a Louisiana resident, recommended the overtime
    
    wage policy that the Appellants followed and, thus, the
    
    Plaintiffs’ “claims for unpaid overtime wages arise out of and
    
    are directly related to defendants’ contacts with Louisiana.” We
    
    find this determination legally incorrect. Even assuming that
    
    Sanderson insisted upon a specific overtime policy, a foreign
    
    corporation’s mere adherence to a policy set in a forum state is
    
    not the kind of activity encompassed by the doctrine of specific
    
    jurisdiction. The Burger King decision explains:
    
              Where a forum seeks to assert specific
    
         jurisdiction over an out-of-state defendant who has not
    
         consented to suit there, [the] “fair warning”
    
         requirement is satisfied if the 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” those
    
         activities . . . .
    
    Burger King, 471 U.S. at 472-73, 105 S. Ct. at 2182 (citations
    
    and footnotes omitted) (emphasis added). Here, the Appellants did
    
    not engage in any activity within Louisiana that affected that
    
    state’s residents. Specific jurisdiction did not exist.
    
         The district court also found that, as to the Appellant
    
    
                                   -6-
    full-service corporations, general jurisdiction existed under a
    
    corporate “alter ego” theory. The district court is correct that,
    
    in considering personal jurisdiction, it may rely on the
    
    activities of a corporation’s “alter ego” to find that the
    
    corporation has sufficient minimum contacts with a forum state.
    
    See, e.g., Dalton, 897 F.2d at 1363; Hargrave v. Fibreboard
    
    Corp., 
    710 F.2d 1154
    , 1159 (5th Cir. 1983). Total stock ownership
    
    and commonality of officers and directors, however, will not
    
    suffice to establish an alter ego for jurisdictional purposes.
    
    Instead, the two entities must in reality be one and the same
    
    corporation. See id. at 1159-60. To that end, the district court
    
    stated that, in this case, “the parent’s control is pervasive
    
    enough for the corporate entities of the non-Louisiana defendants
    
    to be disregarded for purposes of personal jurisdiction.” We
    
    disagree. The plaintiffs did not make any submissions on or
    
    present any evidence of the kind of pervasive “control by the
    
    parent over the internal business operations and affairs of the
    
    subsidiary,” Hargrave, 710 F.2d at 1160, that has been found
    
    sufficient in this Circuit to disregard separate corporate
    
    identities for jurisdictional purposes.
    
         As to the sales-office Appellants, we agree with the
    
    district court, and the Appellants have conceded, that sufficient
    
    minimum contacts exist between those offices and Louisiana to
    
    fulfill that prong of the due process analysis. We also agree
    
    with the magistrate judge, however, that “traditional notions of
    
    fair play and substantial justice” in this case counsel against
    
    
                                   -7-
    the district court’s exercising jurisdiction. Louisiana’s
    
    interest in seeing resolution of this conflict is slight, as the
    
    offended parties are residents of Oregon, Colorado, and Texas,
    
    and are employed by sales offices operating in those states.
    
    Neither the Plaintiffs’ opportunity to secure relief nor the
    
    several states’ interest in FLSA policies will suffer if the
    
    Plaintiffs bring suits in their home states. Fairness dictates
    
    that courts in Oregon, Colorado, and Texas assume jurisdiction
    
    over the claims of in-state residents against corporations
    
    operating out of those states.
    
         Accordingly, the district court’s decision to exercise
    
    jurisdiction over the Appellants is REVERSED and the case is
    
    REMANDED to the district court to grant the Appellants’ motions
    
    to dismiss.
    
    
    
    
                                     -8-