JTS, LLC v. Nokian Tyres PLC et al
ORDER re 9 Motion to Dismiss for Lack of Jurisdiction: GRANTED as to Nokian Holdings, but DENIED as to Nokian PLC. Signed by Judge John W. Sedwick on 6/23/15. (NKD, COURT STAFF)
UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA
JTS, LLC d/b/a JOHNSON’S TIRE
NOKIAN TYRES PLC; NOKIAN
TYRES, INC.; and NOKIAN TYRES
US HOLDINGS INC.,
ORDER AND OPINION
[Re: Motion at Docket 9]
I. MOTION PRESENTED
At docket 9, defendants Nokian Tyres PLC (“Nokian PLC”) and Nokian Tyres US
Holdings Inc. (“Nokian Holdings”; collectively “Defendants”) move to dismiss the action
against them for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal
Rules of Civil Procedure, leaving only Nokian Tyres, Inc. (“Nokian North America”) as a
defendant in the matter. Plaintiff JTS, LLC (“JTS”) opposes the motion at docket 13.
Defendants’ reply is at docket 16. Oral argument was not requested and would not be
of assistance to the court.
JTS, d/b/a Johnson’s Tire Service, is an Alaskan Corporation formed in 2006
with its corporate offices in Anchorage, Alaska. It is in the retail tire business. Kelly
Gaede is President of JTS. He used to work as Vice President of Marketing and Sales
at Nokian North America. He and his father, Dennis Gaede, the former President of
Nokian North America, were extensively involved with JTS’s purchase of Johnson’s Tire
Service in 2006 from James Johnson, the former owner.
Nokian PLC is a Finland corporation with its corporate headquarters in Finland.
It is a tire manufacturer. Nokian North America is a Delaware Corporation with its head
office in Vermont. It is a subsidiary of Nokian PLC and is engaged in the sale and
distribution of Nokian-brand tires in North America. It is undisputed that Nokian North
America conducts business in the State of Alaska and has conducted business and
entered into contracts with JTS. Nokian North America therefore does not dispute the
court’s exercise of jurisdiction over it. Nokian Holdings is a Delaware Corporation with
its head office in Vermont and is also a subsidiary of Nokian PLC. Nokian Holdings
does not sell or distribute Nokian-brand tires.
JTS filed a complaint against the three Nokian companies alleging a breach of
contract, a breach of the covenant of good faith and fair dealing, and a violation of
Alaska’s Unfair Trade Practices Act.1 All three claims primarily sound in contract law.
JTS alleges in its complaint that in 1997 Johnson’s Tire Service, through then-owner
James Johnson, entered into an oral and written agreement with Nokian PLC whereby
AS § 45.50.471.
Nokian PLC agreed to supply Nokian tires on specified terms and at specified prices
and agreed that Johnson’s Tire Service would be the exclusive representative and
distributor of Nokian-brand tires in the State of Alaska. The complaint alleges that at
the time the parties entered into the agreement it was understood and agreed that the
agreement would automatically renew every year unless changed in writing. While
somewhat unclear, the court has gathered from the complaint and Plaintiff’s affidavits in
support that Plaintiff believes the financial terms of the parties’ agreement have been
changed over the years and as recently as 2008, but that the exclusive distribution
agreement has remained in effect, even after JTS purchased Johnson’s Tire Service
from James Johnson and has been at least orally reconfirmed. The complaint and
affidavits in support allege that the exclusive distribution agreement was negotiated,
maintained, and modified the agreement with representatives from all three Nokian
III. STANDARD OF REVIEW
Where a defendant moves to dismiss a complaint pursuant to Federal Rule of
Civil Procedure 12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of
establishing that personal jurisdiction exists.2 Where the motion is based only upon
written materials, rather than an evidentiary hearing, the plaintiff is required only to
make a prima facie showing of personal jurisdiction.6 In determining whether the
plaintiff has made such a prima facie showing, “uncontroverted allegations in [the]
Fields v. Sedgwick Associated Risks, Ltd., 796 F.2d 299, 301 (9th Cir. 1986).
Dole Food Co., Inc. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002).
complaint must be taken as true.” 7 However, allegations in the complaint are not
entitled to the presumption of validity when contradicted by a declaration or affidavit.8
Where the plaintiff submits affidavits or declarations in support of its complaint,
“conflicts between the facts contained in the parties’ affidavits must be resolved in [the
plaintiff’s] favor for purposes of deciding whether a prima facie case for personal
“Where, as here, there is no applicable federal statute governing personal
jurisdiction, the district court applies the law of the state in which the district court sits.” 10
Alaska’s long-arm statute authorizes the exercise of jurisdiction to the extent permitted
by federal due process requirements.11 Due process requires that the defendant “have
certain minimum contacts with [the forum] such that the maintenance of the suit does
not offend traditional notions of fair play and substantial justice.” 12
There are two types of personal jurisdiction, general and specific.13 “General
jurisdiction exists when a defendant is domiciled in the forum state or his activities there
are ‘substantial’ or ‘continuous and systematic.’”14 In the absence of general
Am. Tel. & Tel. Co. v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996).
Data Disc, Inc. v. Sys. Tech. Assocs., Inc., 557 F.2d 1280, 1284 (9th Cir. 1977).
Am. Tel. & Tel. Co., 94 F.3d at 588 (internal quotations omitted).
Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 800 (9th Cir. 2004).
Volkswagenwerk, A.G. v. Klippen, GmbH, 611 P.2d 498, 500 (Alaska 1980).
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted).
Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316, 1320 (9th Cir. 1998).
jurisdiction, the court may exercise personal jurisdiction if specific jurisdiction exists.
The Ninth Circuit uses a three-part test to determine whether specific jurisdiction exists:
(1) The non-resident defendant must purposefully direct his activities or
consummate some transaction with the forum or resident thereof; or
perform some act by which he purposefully avails himself of the privilege
of conducting activities in the forum, thereby invoking the benefits and
protections of its laws; (2) the claim must be one which arises out of or
relates to the defendant’s forum-related activities; and (3) the exercise of
jurisdiction must comport with fair play and substantial justice, i.e. it must
be reasonable. 15
The party seeking to assert jurisdiction bears the burden of showing the first two prongs
are met. If it does so, then the burden shifts to the opposing party to present a
“compelling” case that exercising personal jurisdiction would be unreasonable. 16
Plaintiff asserts that the court has general jurisdiction over Nokian PLC. The
standard for exercising general jurisdiction over a party is high and requires contacts
with the forum state that “approximate physical presence.”17 Plaintiff does not allege
that Nokian PLC has any offices or employees in Alaska, or that it has agents for
service of process in Alaska. There is nothing to suggest that Nokian PLC regularly
had its representatives or employees travel to Alaska. There is nothing to show that it
has any financial assets in Alaska or that it pays taxes in Alaska or that it has any other
Wash. Shoe Co. v. A-Z Sporting Goods Inc., 704 F.3d 668, 672 (9th Cir. 2012)
Bancroft & Masters, Inc. v. Augusta Nat’l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000).
connection to Alaska that could be deemed continuous and systematic. Thus, Plaintiff
has failed to make a prima facie case for general jurisdiction.
Plaintiff alternatively argues that the court can exercise specific jurisdiction over
Nokian PLC. The first prong of the specific jurisdiction test set forth above is analyzed
under either a purposeful availment standard or a purposeful direction standard, which
are “two distinct concepts.” 18 The purposeful availment standard is to be used in cases
which sound primarily in contract.19 The purposeful direction standard is applied in tort
cases and allows personal jurisdiction to “attach if the defendant’s conduct is aimed at
or has an effect in the forum state.”20 Since the claims against Defendants sound
primarily in contract, the court will apply the purposeful availment standard.
Under the purposeful availment standard, the court looks at whether the
defendant’s contacts with the forum state result from actions by the defendant itself and
whether those contacts create a substantial connection. T he standard is met where the
defendant has deliberately engaged in significant activities within the forum or has
created continuing obligations between itself and forum residents.21
Plaintiff’s complaint alleges that it had at least an oral agreement with PLC in
which it was authorized to be the exclusive distributor of Nokian tires in Alaska. The
affidavit submitted in support of Defendants’ motion does not specifically dispute this
fact; it says that Nokian PLC does not conduct business in Alaska and that it does not
Schwarzenegger, 374 F.3d at 802.
Boschetto v. Hansing, 539 F.3d 1011, 1016 (9th Cir. 2008)
Panavision, 141 F.3d at 1321.
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985).
directly sell tires to Alaska, and that it never charged JTS interest pursuant to an
agreement, but it does not aver in its supporting affidavit that it never had an exclusive
distribution agreement with JTS or its predecessor, Johnson’s Tire Services, or that it
never shipped its tires directly to JTS.22 Moreover, even if PLC did specifically contest
the existence of an exclusive distribution agreement in its supporting affidavit, the
affidavits from the Gaedes that Plaintiff filed in support of jurisdiction assert otherwise23
and, as discussed above, the court must resolve disputed facts in favor of Plaintiff and
assume that there was at least an oral agreement of exclusivity underlying all of the
parties’ subsequent dealings. Nokian PLC also cites to a provision in a 2008 purchase
and sale agreement between Nokian North American and JTS which states that the
purchase and sale agreement constitutes the entire contract between the parties
relating to JTS’s purchase of winter tires from Nokian. Nokian PLC argues that such a
provision proves there could not have been an agreement about exclusivity between
the parties, but again, the court has to find in favor of the Plaintiff’s supporting affidavits
that indicate it had at least a long-standing oral agreement about exclusivity separate
from that specific purchase of winter tires in 2008 that endured throughout the parties’
The existence of an agreement between the parties, however, does not resolve
the jurisdictional question because a defendant’s “contract with an out-of-state party
It does contest the existence of such an exclusivity agreement in its briefing, but the
court must look at the supporting documentation.
See, e.g., doc. 13-1 at p. 5, ¶¶ 21-24; doc. 13-1 at p. 29, ¶ 6; doc. 13-1 at p. 31, ¶ 20;
doc. 13-1 at p. 32, ¶ 21-25.
alone” cannot “automatically establish sufficient minimum contracts in the other party’s
home forum.”24 Rather, when personal jurisdiction is asserted based on a contract
between parties, the Supreme Court has instructed courts to use a “highly realistic”
approach to determine whether the contract creates a substantial connection to the
. . . [A] contract is ordinarily but an intermediate step serving to tie up prior
business negotiations with future consequences which themselves are the
real object of the business transaction. It is these factors—prior negotiations
and contemplated future consequences, along with the terms of the contract
and the parties’ actual course of dealing—that must be evaluated in
determining whether the defendant purposefully established minimum
contact within the forum.25
In other words, “[p]urposeful availment requires that the defendant ‘[perform] some type
of affirmative conduct which allows or promotes the transaction of business within the
Plaintiff has not presented enough information for the court to find that the
parties’ prior negotiations related to the exclusive distribution agreement or any
subsequent modifications to that agreement support a finding of minimum contacts on
the part of Nokian PLC. Plaintiff does not give any information about who initiated
contact in 1997 when the original agreement between JTS’s predecessor and Nokian
PLC was negotiated. The only information on the record is that Plaintiff, through Kelly
Gaede, reached out in 2006 to Nokian North Am erica and Nokian PLC regarding
Id. at 478.
Id. (internal quotations and citations omitted).
Sher v. Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990) (quoting Sinatra v. Nat’l
Enquirer, Inc., 854 F.2d 1191, 1195 (9th Cir. 1988)).
modification and expansion of the parties’ prior relationship and agreements.
Negotiations took place via email, mail, and phone calls, but such indirect contacts do
not qualify as purposeful activity warranting the exercise of personal jurisdiction.27
Even though the negotiations did not lead to significant contacts with Alaska, the
nature of an exclusive distribution agreement and the future consequences that flow
from such an agreement strongly favor a finding of purposeful availment on the part of
Nokian PLC here. Such an agreement creates continuing obligations on the part of
Nokian PLC to an Alaska resident. Taking as true that there was a longstanding
distributorship agreement whereby JTS had the right to be the sole retailer of Nokian
PLC’s tires in Alaska, Nokian PLC should have reasonably anticipated being haled into
court in Alaska.28 Indeed, based on Plaintiff’s supporting affidavits, Nokian PLC
fostered its long-standing relationship to JTS by financing JTS representatives to travel
to Finland for conferences and product launches and meetings, and by sending a
representative from Nokian PLC to visit Johnson Tires Services in order to strengthen
its relationship with the retailer. Plaintiff, through the affidavit of Kelly Gaede, asserts
that Nokian PLC also helped it defend its exclusive distribution agreement against
another unauthorized retailer in Alaska. While Nokian PLC disputes this fact, conflicts
in the parties’ affidavits must be resolved in Plaintiff’s favor. Also, Nokian tires were
Peterson v. Kennedy, 771 F.2d 1244, 1262 (9th Cir. 1985) (noting that “use of the
mails, telephone, or other international communications simply do not qualify as purposeful
activity invoking the benefits and protection of the [forum] state”).
See Excel Plas, Inc. v. Sigmax Co., Ltd., No. 07-cv-578, 2007 WL 2853932, at * 8
(S.D. Cal. Sept. 27, 2007) (listing cases where other courts have found purposeful availment in
a situation where the parties have entered into long-term distributorship agreements).
shipped directly from Nokian PLC’s Finland plant to JTS in Alaska. In sum, the future
obligations entailed in the agreement created a connection to Alaska to satisf y the
minimum contacts requirement. Plaintiff has sufficiently shown through its complaint
and affidavits that its agreement with Nokian PLC envisioned an enduring relationship
with an Alaskan company.
As for the second prong of the specific jurisdiction analysis, the claims here
clearly arise out of Nokian PLC’s forum-related contacts. Nokian PLC’s link to Alaska is
based on its exclusive distribution agreement with JTS and that agreement is also the
basis for Plaintiff’s contract claims against Nokian PLC. In other words, Plaintiff’s
claims would not have arisen “but for” Nokian PLC’s contacts with the forum.29
Plaintiff has satisfied its burden of establishing a prima facie case for personal
jurisdiction over Nokian PLC. The court must next consider whether the exercise of
such jurisdiction would be reasonable. 30 The Ninth Circuit looks at a variety of factors
when determining whether exercise of jurisdiction over a nonresident defendant is
(1) the extent of the defendants’ purposeful injection into the forum state’s
affairs; (2) the burden on the defendant of defending in the forum; (3) the
extent of conflict with the sovereignty of the defendant’s state; (4) the forum
state’s interest in adjudicating the dispute; (5) the most efficient judicial
resolution of the controversy; (6) the importance of the forum to the plaintiff’s
interest in convenient and effective relief; and (7) the existence of an
Doe v. Unocal Corp., 248 F.3d 915, 924-25 (9th Cir. 2001).
Dole Food, 303 F.3d at 1111.
Id. at 1114.
While it is Nokian PLC’s burden to demonstrate unreasonableness, Nokian PLC does
not address these factors in its briefing. Rather, it simply argues that because it does
not have any direct contacts with Alaska, “imposing jurisdiction under such
circumstances would constitute overreaching and an impermissible extension fo
Constitutional authority.”32 In its reply brief, it also argues that imposing jurisdiction
would be unfair because the operations manager for JTS admitted that JTS does not
have an exclusive distribution agreement with Nokian PLC. However, a close reading
of the evidence cited shows that the manager believes the parties had an oral
Turning to the factors listed above, the court concludes that the only factor
weighing in favor of Nokian PLC is the relatively minimal extent of Nokian PLC’s
interjection into Alaska, which is limited to the exclusivity agreement and not on direct
physical contact. The court also acknowledges the potential burden on Nokian PLC in
litigating in a foreign country. However, courts have recently “noted there will inevitably
be a burden on foreign defendants to participate in United States litigation, but
reasoned the burden is reduced by modern advances in communications and travel.”34
All other factors weigh in favor of retention of jurisdiction over Nokian PLC. Nokian PLC
has not presented a compelling case that it would be “so gravely difficult and
Doc. 10 at p. 12.
Doc. 16-6 (Ex. F) at p. 1.
Excel Plas, 2007 WL 2853932, at *10.
inconvenient” to litigate in Alaska or that it is at a “severe disadvantage” by having to do
As was the case with Nokian PLC, Plaintiff has not demonstrated that Nokian
Holdings has any type of connection to Alaska that could be deem ed continuous and
systematic to warrant the court’s exercise of general jurisdiction over Nokian Holdings.
Plaintiff has also failed to make the requisite showing needed to establish specific
jurisdiction over Nokian Holdings. That is, there is nothing on the record to show that
Nokian Holdings purposefully availed itself of the privilege of doing business in Alaska
through the exclusive distribution agreement that forms the basis of Plaintiff’s
complaint. Nokian Holdings disputes that it had an exclusive distribution contract with
Johnson Tire Service or JTS. It is not clearly stated in Plaintiff’s affidavits that Nokian
Holdings was involved in agreeing to exclusive distribution, which is the basis of
Plaintiff’s claims against Defendants. Indeed, Nokian Holdings is not in the business of
selling or distributing tires or any other product. Rather, based on Plaintiff’s supporting
affidavits, Nokian Holdings appears to be a financing subsidiary, and its involvement in
any agreements with Plaintiff appears to be limited to negotiations regarding pricing,
interest rates, and other financing terms. Thus, unlike PLC, the court cannot conclude
from Plaintiff’s affidavits that Nokian Holdings itself was a party to the original exclusive
distribution agreement, which is the basis of all three of Plaintiff’s claims. At most, the
affidavits suggest that JTS may have had an ancillary financing agreement with Nokian
Burger King, 471 U.S. at 478.
Holdings, but Plaintiff claims a breach related to exclusive distribution, not financing
Plaintiff argues that Nokian Holdings has sufficient contacts with Alaska because
communications about the financial terms of the parties’ agreements over the years
were conducted through Jari Lepisto, the President of Nokian Holdings. While Lepisto
may have engaged in numerous out-of-state meetings and email communications with
JTS, that alone is not enough to warrant the court’s exercise of specific jurisdiction over
Plaintiff also argues that jurisdiction over all three named defendants is
warranted because Nokian PLC, Nokian North America, and Nokian Holdings are
indistinct from one another and that the contacts of one can be imputed to the other.
Typically, subsidiary and parent corporations are separate entities and the contacts of
one for purposes of jurisdiction are not attributable to the other. 36 However, an
exception is made if the parent and subsidiary are not separate entities or when one
acts as an agent of the other. “An alter ego or agency relationship is typified by
parental control of the subsidiary’s internal affairs or daily operations.”37 An alter ego
relationship exists if there is “such unity of interest and ownership” that the two entities
are indistinct from one another. 38 An agency relationship exists when “the subsidiary
functions as the parent corporation’s representative in that it performs services that are
Doe v. Unocal Corp., 248 F.3d 915, 925 (9th Cir. 2001).
Id. at 926.
‘sufficiently important to the foreign corporation that if it did not have a representative to
perform them, the corporation’s own officials would undertake to perform substantially
similar services.”39 Here, the record is insufficient to explain the necessary relationship
between Nokian Holdings and the other companies. Kelly Gaede’s affidavit merely
states without any supporting details that Jari Lepisto of Nokian Holdings makes
decisions for Nokian North America and acts at the direction of Nokian PLC. The one
specific detail provided is that “Nokian PLC exercises strict control over its subsidiaries
in North America by removing cash from . . . bank accounts as they see fit.”40 Dennis
Gaede’s affidavit states that Nokian PLC “exert[s] complete operational control over the
subsidiaries,”41 but again there are not enough supporting details provided for the court
to make a finding regarding alter ego or agency relationships. The record does not
allow the court to determine that Nokian PLC has so much control of daily operations
that Nokian Holdings should be considered part of Nokian PLC rather than a separate
corporation.42 Thus, JTS has not established a prima face case of alter-ego or agency
Id. at 928 (quoting Chan v. Soc’y Expeditions, Inc., 39 F.3d 1398, 1405 (9th Cir. 1994).
Doc. 13-1 at p.6, ¶ 31, 38.
Doc 13-1 at p. 29, ¶ 5.
Id. at 926 (noting that a subsidiary’s contacts are not imputed to the parent company
when the parent merely monitors a subsidiary’s performance or supervises financial and budget
decisions); Harris Rutsky & Co. Ins. Servs., Inc. v. Bell & Clements Ltd., 328 F.3d 1122, 1135
(9th Cir. 2003).
Based on the preceding discussion the motion to dismiss at docket 9 is
GRANTED as to Nokian Holdings, but DENIED as to Nokian PLC.
DATED this 23rd day of June 2015.
/s/ JOHN W. SEDWICK
SENIOR UNITED STATES DISTRICT JUDGE
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