BVS Inc v. RHUB Communications Inc
MEMORANDUM OPINION AND ORDER granting in part and denying in part 9 Motion to Dismiss; granting in part and denying in part 29 Supplemental Motion to Dismiss. The motions are denied as to the request for dismissal but are granted as to RHUB 9;s alternative request to transfer venue to the Northern District of California. The Clerk shall transfer this case to the United States District Court for the Northern District of California. Signed by Judge Leonard T Strand on 2/6/17. (Case electronically transferred to USDC of Northern California). (djs)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
CEDAR RAPIDS DIVISION
RHUB COMMUNICATIONS, INC.
OPINION AND ORDER
This matter is before me on a motion (Doc. No. 9) by defendant RHUB
Communications, Inc. (RHUB) to dismiss this action for lack of personal jurisdiction, or
alternatively, to transfer venue. Plaintiff BVS, Inc. (BVS), filed a resistance (Doc. No.
18) and RHUB filed a reply (Doc. No. 21). While that motion was pending, BVS filed
a motion (Doc. No. 24) for leave to amend its complaint. The motion was granted (Doc.
No. 27) and a first amended and substituted complaint (Doc. No. 28) was filed.
RHUB then filed a supplemental motion (Doc. No. 29) to dismiss for lack of
personal jurisdiction, or alternatively, to transfer venue. BVS has filed a resistance (Doc.
No. 30) and RHUB has filed a reply (Doc. No. 31). Neither party has requested oral
argument. I find that oral argument is not necessary. See N.D. Ia. L.R. 7(c).
BVS is an Iowa corporation with its principal place of business in Cedar Rapids,
Iowa. RHUB is a California corporation with its principal place of business in San Jose,
California. After BVS commenced this action in the Iowa District Court for Linn County,
RHUB removed it to this court on the basis of federal diversity jurisdiction. See Doc.
No. 2. The state court petition (Doc. No. 3) asserted one count of breach of contract
based on a “ClickBranch Agreement” (CB Agreement), attached to the petition as Exhibit
1. BVS contends that the parties entered into that agreement on or about August 22,
Pursuant to the CB Agreement, RHUB agreed to provide services and make
changes and enhancements to its TurboMeeting Software to create the ClickBranch
product. The intended outcome was a video communications product that would allow a
bank or credit union customer, or prospective customer, to click on a button on the
institution’s website to initiate audio and visual communication with a live company
representative while sharing screens to conduct financial business. BVS agreed to pay
$200,000 to RHUB in exchange for a viable product and a license to use the product in
the bank and credit union industry in the United States and other specified areas. The
petition alleged that as of April 2016, RHUB’s efforts resulted in a “nonviable product
riddled with glitches and mistakes that render it unusable for BVS and end users.” Doc.
No. 3 at ¶ 9. BVS contends this failure to perform, or failure to perform in a reasonably
competent and timely fashion, constitutes a breach of the CB Agreement.
BVS’s first amended and substituted complaint (Doc. No. 27) adds another breach
of contract claim (Count II) based on additional agreements. BVS alleges that on or about
January 17, 2014, and March 17, 2014, BVS entered into written agreements with RHUB
for the delivery and maintenance of certain servers and software (Server Agreements).
BVS further alleges that the RHUB products, including those subject to the Server
Agreements, come with a one-year warranty service, called RHUB Enable, that provides
customers with software updates and technical support. After that warranty expires,
customers may purchase additional warranty coverage on an annual basis to continue the
RHUB Enable support services.
BVS alleges that it purchased additional warranty and upgrade services for its
RHUB servers after the initial warranties expired. BVS contends that as part of this
service, RHUB agreed to provide software updates and technical support. From February
2015 through February 2016, RHUB allegedly invoiced BVS eight (8) times for services,
software updates and support. BVS attached copies of the invoices to the first amended
and substituted complaint.
The most recent invoice purportedly extends warranty
coverage through February 2017. BVS alleges RHUB breached the Server Agreements
by refusing to perform support services in July 2016. BVS also seeks a declaratory
judgment (Count III) regarding RHUB’s alleged refusal to perform its obligations under
the Service Agreements and asks the court to declare that RHUB is required to perform
ongoing warranty and support services. Doc. No. 27 at ¶ 25.
It its initial motion and supplemental motion, RHUB argues that it is not subject
to personal jurisdiction in Iowa. It contends that it is a California corporation and that
its only connection to Iowa is BVS’ solicitation to enter into an agreement through which
RHUB’s performance was to occur entirely in California. RHUB argues that the first
amended and substituted complaint does not change the jurisdictional analysis. While
BVS added an allegation that RHUB consented to jurisdiction in Iowa, RHUB denies that
the Server Agreements, or any actions allegedly performed pursuant to those agreements,
indicate its consent to jurisdiction in Iowa. It contends that this court should either
dismiss this action or transfer venue to the Northern District of California.
Standards Under Rule 12(b)(2)
To survive a Rule 12(b)(2) motion to dismiss, the plaintiff must make a prima
facie showing of jurisdiction. Viasystems, Inc. v. EBM-Papst St. Georgen GmbH & Co.,
KG, 646 F.3d 589, 592 (8th Cir. 2011). This means the plaintiff is required to go beyond
the pleadings and come forward with affidavits and exhibits establishing jurisdiction.
Miller v. Nippon Carbon Co., Ltd., 528 F.3d 1087, 1090 (8th Cir. 2008). The court
“may exercise jurisdiction over a foreign defendant only to the extent permitted by the
forum state’s long-arm statute and by the Due Process Clause of the Constitution.” Id.
at 1090 (internal quotations omitted).
In this case, Iowa’s long-arm statute1“expands Iowa’s jurisdictional reach to the
widest due process parameters allowed by the United States Constitution.” Hammond v.
Florida Asset Financing Corp., 695 N.W.2d 1, 5 (Iowa 2005) (citing Hodges v. Hodges,
572 N.W.2d 549, 552 (Iowa 1997)).
“Due process requires sufficient ‘minimum
contacts’ between the defendant and the forum state so that ‘maintenance of the suit does
not offend traditional notions of fair play and substantial justice.’” Epps v. Stewart Info.
Servs. Corp., 327 F.3d 642, 647 (8th Cir. 2003) (quoting World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 291-92 (1980)). “The ‘substantial connection’ between the
defendant and the forum State necessary for a finding of minimum contacts must come
about by an action of the defendant purposefully directed toward the forum State.” Asahi
Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 112 (1987).
There are two theories for evaluating personal jurisdiction: general and specific
jurisdiction. Dever v. Hentzen Coatings, Inc., 380 F.3d 1070, 1073 (8th Cir. 2004).
“Under the theory of general jurisdiction, a court may hear a lawsuit against a defendant
who has ‘continuous and systematic’ contacts with the forum state, even if the injuries at
issue in the lawsuit did not arise out of the defendant’s activities directed at the forum.”
Id. (quoting Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 415-16
(1984)). Specific jurisdiction “is viable only if the injury giving rise to the lawsuit
occurred within or had some connection to the forum state.” Dever, 380 F.3d at 1073
See Iowa R. Civ. P. 1.306 and Iowa Code § 617.3.
(quoting Helicopteros, 466 U.S. at 414). Both theories require “some act by which the
defendant purposely avails itself of the privilege of conducting activities within the forum
State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357
U.S. 235, 253 (1958).
The Eighth Circuit has identified the following factors to consider when evaluating
whether the court has personal jurisdiction over a particular defendant:
the nature and quality of [the defendant’s] contacts with the forum
the quantity of such contacts;
the relation of the cause of action to the contacts;
the interest of the forum state in providing a forum for its residents;
convenience of the parties.
Myers v. Casino Queen, Inc., 689 F.3d 904, 911 (8th Cir. 2012) (citing Precision Const.
Co. v. J.A. Slattery Co., Inc., 765 F.2d 114, 118 (8th Cir. 1985) for the proposition that
the first three factors are of primary importance and the last two of secondary
importance). “The third factor distinguishes between specific and general jurisdiction.”
Myers, 689 F.3d at 911.
BVS argues jurisdiction may be established based on the following:
RHUB accepted $200,000 from BVS for services RHUB contracted
RHUB has sold and shipped multiple computer servers and support
services to Iowa residents during the past five years;
RHUB highlights the reputation of an Iowa company on its website
as a means to develop more business; and
includes a forum selection clause identifying Linn County, Iowa as
the appropriate forum for litigation.
I will address each argument in turn.
Acceptance of Payment for Contracted Services
BVS argues I can find personal jurisdiction over RHUB based on its acceptance
of $200,000 from BVS to create the ClickBranch product. BVS notes that it began its
relationship with RHUB in January 2014 by purchasing computer servers that contained
RHUB software. BVS made a second server purchase in March 2014. In August 2014,
BVS and RHUB entered into the CB Agreement, which required BVS to pay $200,000
to RHUB in exchange for the ClickBranch product and a license. BVS attests it has paid
the full $200,000. See Doc. No. 18-1 at 20.
Acceptance of payment for contracted services is generally insufficient to establish
personal jurisdiction. See Fastpath, Inc. v. Arbela Techs. Corp., 760 F.3d 816, 821 (8th
Cir. 2014) (“A contract between a plaintiff and an out-of-state defendant is not sufficient
in and of itself to establish personal jurisdiction over the defendant in the plaintiff’s forum
state.”). A prima facie case of specific personal jurisdiction requires that the defendant
“‘purposefully directed’ [its] activities at residents of the forum” and that “the litigation
results from alleged injuries that ‘arise out of or relate to’ those activities.” Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (citing Keeton v. Hustler Magazine, Inc.,
465 U.S. 770, 774 (1984) and Helicopteros, 466 U.S. at 414). Stated another way,
specific jurisdiction is proper only “where the contacts proximately result from actions
by the defendant himself that create a substantial connection with the forum state.”
Fastpath, 760 F.3d at 821 (quoting Stanton v. St. Jude Med., Inc., 340 F.3d 690, 694
(8th Cir. 2003)). “The unilateral activity of those who claim some relationship with a
nonresident defendant cannot satisfy the requirement of contact with the forum State.”
Hanson, 357 U.S. at 253. “[T]he relationship must arise out of contacts that the
defendant himself creates with the forum State.” Walden v. Fiore, __U.S. __, 134 S. Ct.
1115, 1122 (2014) (quoting Burger King Corp., 471 U.S. at 475).
The record demonstrates that BVS contacted RHUB to create the ClickBranch
product and to purchase computer servers and support services. See Doc. No. 21-1 at 2
(“The only way to purchase products or services from RHUB is to contact RHUB directly
at its office in California, which is the method BVS used to purchase products.”); Id. at
4-7 (describing various invoices to BVS that indicate orders were placed through verbal
or email communication). RHUB did not solicit BVS to make the purchases. See id.
(“RHUB has a website that is RHUB’s primary marketing tool . . . . That website
primarily supplies potential customers with general information about RHUB’s business
and products.”). The fact that RHUB fulfilled purchase orders from BVS, entered into
an agreement to create a product for BVS and was paid by BVS does not establish that
RHUB “purposefully avail[ed] itself of the privilege of conducting activities within the
forum State, thus invoking the benefits and protections of its laws.” Hanson, 357 U.S.
at 253. BVS has failed to establish personal jurisdiction on this basis.
Sale and Shipment of Products to Forum Residents
BVS’ next argument focuses on RHUB’s relationship with Iowa customers other
than BVS. BVS points out that RHUB has six current customers in Iowa. Doc. No. 181 at 6. One of these customers is featured on RHUB’s website. Id. at 16. Larry Dorie,
President and CEO of RHUB, estimates that it derived approximately $3,000 to $4,000
in revenue from Iowa during the first half of 2016 and $10,000 during 2015.2 Id. at 6.
He further states that for the past five years, RHUB’s Iowa sales have accounted for less
These estimates exclude any income from BVS.
than two percent of its total sales in the United States for each year. See Doc. No. 21-1
at 7-8. Four of RHUB’s Iowa customers have extended their maintenance contracts,
meaning RHUB provides ongoing support services of the following nature to four Iowa
We provide advanced replacement in case the unit becomes defective.
Software updates, we protect from obsolescence by updating the software
on your server, and we can do that automatically. Technical support, if
you need support you can have access to our support people. Continuous
availability, if your product fails, we will put you up on our servers and
give you accounts on our servers until your product is replaced. And audio
conferencing service, we provide an external – what we call BSTN –
audioconferencing service that we provide with the product that comes with
it if you’re on – if you subscribe to the warranty. If you don’t subscribe to
the warranty, you have to use the internal system, which is the speaker
microphone that I’m using.
Doc. No. 18-1 at 6, 8. To put these contacts in context, RHUB does business in 46 states
and 19 countries. Id. at 13.
“A court may assert general jurisdiction over foreign (sister-state or foreigncountry) corporations to hear any and all claims against them when their affiliations with
the State are so ‘continuous and systematic’ as to render them essentially at home in the
forum State.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919
(2011). Contacts which are “random,” “fortuitous” or “attenuated” are insufficient to
establish general jurisdiction. Steinbuch v. Cutler, 518 F.3d 580, 586 (8th Cir. 2008).
“Merely entering into a contract with a forum resident does not provide the requisite
contacts between a (nonresident) defendant and the forum state.” Mountaire Feeds, Inc.
v. Agro Impex, S.A., 677 F.2d 651, 655 (8th Cir. 1982).
I find that RHUB’s limited Iowa contacts do not rise to the level of systematic and
continuous contacts such that RHUB could be considered to be “at home” in Iowa. First,
nothing in the record suggests RHUB solicited business from these Iowa companies.
Second, there is no indication that a RHUB representative has ever visited Iowa in
connection with one of these relationships. Third, the record suggests RHUB performs
all services related to these customers in California, Texas or India, where its employees
are located. Fourth, any ongoing maintenance and support services RHUB provides is
at the customer’s request upon payment of the annual maintenance fee. In other words,
it is the third party that is maintaining the relationship, not RHUB. See Burger King
Corp., 471 U.S. at 475 (“Jurisdiction is proper, however, where the contacts proximately
result from actions by the defendant himself that create a ‘substantial connection’ with the
forum state.’”) (emphasis in original); Hanson, 357 U.S. at 253 (stating “it is essential
in each case that there be some act by which the defendant purposefully avails itself of
the privilege of conducting activities within the forum State, thus invoking the benefits
and protections of its laws.”).
For these reasons, I find that BVS has not established that this court has general
personal jurisdiction over RHUB based on RHUB’s limited, unsolicited commercial
relationships with Iowa companies.
BVS argues that two of RHUB’s Internet activities establish personal jurisdiction:
(1) listing an Iowa customer on its website3 and (2) conducting business and providing
services via the Internet. In considering the significance of Internet activity, the Eighth
Circuit has adopted the sliding scale analysis developed in Zippo Mfg. Co. v. Zippo Dot
Com, Inc., 952 F. Supp. 1119, 1124 (W.D. Pa. 1997). See Lakin v. Prudential Sec.,
Inc., 348 F.3d 704, 710 (8th Cir. 2003). The Zippo court explained the analysis as
BVS has provided a screenshot of the website, which lists the Iowa customer along with four
others from different states. Doc. No. 18-1 at 16. The website itself, www.rhubcom.com, contains
a continuous scroll of various customers throughout the United States.
At one end of the spectrum are situations where a defendant clearly does
business over the Internet. If the defendant enters into contracts with
residents of a foreign jurisdiction that involve the knowing and repeated
transmission of computer files over the Internet, personal jurisdiction is
proper. At the opposite end are situations where a defendant has simply
posted information on an Internet Web site which is accessible to users in
foreign jurisdictions. A passive Web site that does little more than make
information available to those who are interested in it is not grounds for the
exercise [of] personal jurisdiction. The middle ground is occupied by
interactive Web sites where a user can exchange information with the host
computer. In these cases, the exercise of jurisdiction is determined by
examining the level of interactivity and commercial nature of the exchange
of information that occurs on the Web site.
Zippo Mfg. Co., 952 F. Supp. at 1124 (citations omitted). In cases alleging specific
jurisdiction, the Zippo analysis is sufficient to determine whether there are minimum
contacts. However, when general jurisdiction is alleged, the Eighth Circuit requires the
additional step of evaluating the quantity of the contacts with forum state residents.
Lakin, 348 F.3d at 712.
RHUB argues it has a passive website under Zippo because it merely makes
information available to interested users. RHUB supplies general information about its
products and services and does not permit customers to purchase products directly
through the website. See Doc. No. 21-1 at 2. To purchase products or services,
customers must contact RHUB at its office in California. Id. Because its website does
not meet the initial Zippo standard, RHUB argues BVS cannot establish general
jurisdiction. In any event, BVS has not submitted any evidence or requested jurisdictional
discovery to determine the number of Iowa residents who have accessed RHUB’s website.
Instead, BVS relies only on the number of RHUB’s actual Iowa customers.
RHUB’s website, without more, does not come close to establishing general
jurisdiction in Iowa. Under the Zippo analysis, RHUB maintains a passive website. It
is not interactive and requires customers to contact RHUB directly in order to purchase
its products or services. Nor is RHUB’s advertisement of an Iowa customer on the
website noteworthy. There is no indication that RHUB provides this information for the
purpose of targeting Iowa residents or soliciting business from Iowa.
identities of the Iowa customer and various customers from other states are available to
all who view RHUB’s website. See VGM Financial Servs. v. Singh, 708 F. Supp. 2d
822, 839 (N.D. Iowa 2010) (finding that a website listing six Iowa medical practitioners
who used third party defendant’s products was insufficient to establish general jurisdiction
without more). RHUB’s website does not give rise to general jurisdiction over RHUB
The same is true regarding RHUB’s business activities on the Internet. BVS
alleges that RHUB conducts business exclusively via electronic means and provides its
services via the Internet. As such, RHUB is able to conduct business in 46 states,
including Iowa, and 19 other countries. In Iowa, RHUB has six customers and provides
ongoing support services for four of them. The services are provided through electronic
communication, including video conferencing and remote access.
Of course, in analyzing whether there is personal jurisdiction, “it is essential that
‘there be some act by which the defendant purposefully avails itself of the privilege of
conducting activities within the forum State, thus invoking the benefits and protections of
its law.’” VGM Financial Servs., 708 F. Supp. 2d at 836-37 (quoting Burger King Corp.,
471 U.S. at 475). There is no evidence that RHUB reached into Iowa to solicit its Iowa
customers or specifically marketed to Iowa residents via the Internet. While RHUB
maintains an ongoing relationship with four Iowa customers by providing remote support
services, this is at the request of (and upon payment by) those customers on an annual
basis. The support services occur only after the Iowa customer contacts RHUB. See
Doc. No. 18-1 at 3 (stating that if a customer has an issue requiring technical support,
the customer contacts RHUB’s support organization). The record is clear that it is the
customers’ actions that maintain the relationships, not RHUB’s.
Finally, the fact that RHUB utilizes the Internet to meet the needs of its customers
is not particularly relevant, as the Internet is not an Iowa-specific form of communication.
RHUB did not purposely avail itself of the privilege of conducting activities in Iowa
simply by using the Internet. RHUB’s Internet activities do not give rise to personal
jurisdiction in Iowa.
Forum Selection Clause
BVS also attempts to establish personal jurisdiction based on a choice of law and
forum selection clause contained in purchase orders that were drafted and issued by BVS.
These purchase orders were for servers that contained RHUB software and state: “This
Agreement shall be governed by the laws of Iowa. Should a dispute arise concerning the
products or this Agreement, the Court to determine the dispute shall be the state Court
in Linn County, Iowa.” See Doc. No. 18-1 at 17-18. BVS’ President attests that BVS
has continued to pay the annual maintenance fee to RHUB for updates and support for
the servers. Id. at 19-20. H further states that BVS has paid more than $139,000 for the
servers, software and support. Id.
BVS argues that RHUB agreed to the terms of the purchase orders based on Iowa
Code § 554.2206(1). This provision of Iowa’s Uniform Commercial Code states, in
relevant part: “Unless otherwise unambiguously indicated by the language or
circumstances . . . an order or other offer to buy goods for prompt or current shipment
shall be construed as inviting acceptance either by a prompt promise to ship or by the
prompt or current shipment of conforming or nonconforming goods.” Thus, BVS argues
that RHUB’s shipment of the servers after receipt of BVS’ orders bound RHUB to the
choice of law and forum selection clauses.
RHUB acknowledges that it shipped the servers to BVS in Iowa after receiving the
purchase orders. It argues, however, that the purchase orders do not apply to any dispute
over support services BVS claims it was entitled to receive in 2016, or to the CB
Agreement. The servers were purchased in 2014 and included the RHUB Enable service
for one year. After that, BVS separately purchased RHUB Enable support for these
servers on an annual basis. See Doc. No. 21-1 at 3. RHUB states, by affidavit, that
BVS did not purchase the RHUB Enable support services by issuing written purchase
orders but, instead, through verbal or email communication. See Doc. No. 21-1 at 3-7.
Therefore, RHUB argues the purchase orders BVS relies upon are immaterial to this
dispute and should not apply.
RHUB also argues the forum selection clauses in BVS’ purchase orders do not
apply because RHUB shipped the servers with its End-User License Agreements, which
specify the application of California law and state that they:
are the entire agreement between you and RHUB relating to the Product
and the support services (if any) and they supersede all prior or
contemporaneous oral or written communications, proposals and
representations with respect to the Product or any other subject matter
covered by this EULA.
See Doc. No. 21-1 at 3; Doc. No. 21-2 at 2. RHUB relies on Iowa Code § 554.2207 to
argue that the terms of BVS’ purchase orders were superseded by the End-User License
Agreements. Section 554.2207 states:
A definite and seasonable expression of acceptance or a written
confirmation which is sent within a reasonable time operates as an
acceptance even though it states terms additional to or different from
those offered or agreed upon, unless acceptance is expressly made
conditional on assent to the additional or different terms.
The additional terms are to be construed as proposals for addition to
the contract. Between merchants such terms become part of the
the offer expressly limits the acceptance to the terms of the
they materially alter it; or
notification of objection to them has already been given or is
given within a reasonable time after notice of them is
Iowa Code § 554.2207. RHUB argues that “[t]here is no evidence BVS notified RHUB
of objections to the terms of the End-User License Agreement.” Doc. No. 21 at 7. It
further argues that “[t]he End-User License Agreements constitute written confirmations
within the meaning of § 554.2207 and the additional terms they contained should be
enforced.” Id. at 8.4 However, the BVS purchase orders state: “No BVS purchase is
authorized without a copy of this purchase order, accepting these terms by signing below
by the Seller and returning to BVS.” See Doc. No. 18-1 at 17-18. Thus, this is a classic
“battle of the forms” situation.
I need not wade further into this UCC morass because I find that the question of
whether RHUB is subject to jurisdiction in Iowa is not dependent upon which boilerplate
form (if any) controls. There is no evidence that the forum selection clauses in BVS’
purchase orders were communicated and negotiated between the parties. Because the
ultimate inquiry is whether RHUB purposely invoked the benefits and protections of Iowa
law, it is important to consider whether RHUB affirmatively submitted to Iowa law and
an Iowa forum through negotiations with BVS. See, e.g., Servewell Plumbing, LLC v.
Federal Ins. Co., 439 F.3d 786, 789 (8th Cir. 2006) (courts generally honor a forum
selection clause if it was “the fruit of an arm’s-length negotiation”).
RHUB appears to assume that BVS is a “merchant,” meaning “a person who deals in goods of
the kind or otherwise by the person's occupation holds that person out as having knowledge or
skill peculiar to the practices or goods involved in the transaction.” See Iowa Code §
554.2104(1). While the current record is not definitive on this point, the available information
supports RHUB’s assumption. The CB Agreement contemplated that RHUB and BVS would
“work together” to develop the ClickBranch product and that the product would include software
developed or supplied by BVS. See Doc. No. 28 at 11. The CB Agreement also included
RHUB’s grant of a license to BVS to reproduce and distribute the product to end users. Id.
Here, Dorie states by affidavit that he does not recall seeing the purchase order
forms from BVS and notes that the exhibits submitted by BVS are not signed by an RHUB
representative. He adds, “RHUB did not and would not have agreed to the terms of the
purchase order included on these forms, particularly the [forum selection clause and
choice of law clause].” Doc. No. 21-1 at ¶ 7. This is consistent with the CB Agreement,
the one written agreement of record that was negotiated and signed by the parties, as that
agreement does not specify an Iowa forum. Doc. No. 28 at 11-12. BVS has submitted
no evidence suggesting that the parties’ negotiations included discussions of a forum
selection clause. I find that BVS’ boilerplate purchase order terms are not particularly
relevant to the question of whether RHUB purposely availed itself of the privilege of
conducting activities in Iowa.
Personal Jurisdiction -- Conclusion
BVS has failed to establish personal jurisdiction as to RHUB under the five factors
considered by the Eighth Circuit: (1) the nature and quality of [the defendant’s] contacts
with the forum state; (2) the quantity of such contacts; (3) the relation of the cause of
action to the contacts; (4) the interest of the forum state in providing a forum for its
residents and (5) convenience of the parties. Myers, 689 F.3d at 911. RHUB’s limited
contacts with Iowa have been initiated by the actions of Iowa residents, not by actions on
the part of RHUB that were purposefully directed at Iowa. RHUB maintains a passive
website such that any potential customer interested in its products or services must contact
RHUB in California. RHUB does not have a physical presence in Iowa and conducts its
business with Iowa residents solely through mail and electronic communications.
Moreover, RHUB has just six Iowa customers and provides ongoing support services to
four of those customers. RHUB conducts business in 46 states and 19 countries and its
sales of computer servers to Iowa customers account for no more than two percent of its
annual sales over the past five years. See Doc. No. 21-1 at 7-8.
BVS’ causes of action clearly relate to RHUB’s contacts with Iowa, as BVS is one
of RHUB’s Iowa customers and claims that RHUB has failed to fulfill its contractual
obligations. While this factor weighs in favor of jurisdiction, it is somewhat mitigated
by the fact that RHUB’s services were performed in California and other locations, not
in Iowa. As for Iowa’s interest in providing a forum for its residents to litigate contract
disputes, that interest is not compelling where, as here, the Iowa resident chose to conduct
business with an entity outside of Iowa that does not directly solicit Iowa customers.
Finally, the convenience of the parties is a neutral factor. An Iowa forum would be
convenient for BVS but not for RHUB, which is based in California and has employees
in California, Texas and India.
Having considered and weighed the relevant factors, I conclude BVS has failed to
meet its burden of showing that this court has personal jurisdiction over RHUB.
Because personal jurisdiction is lacking, I must consider whether the appropriate
disposition is dismissal or a transfer of venue. “The district court of a district in which
is filed a case laying venue in the wrong division or district shall dismiss, or if it be in
the interest of justice, transfer such case to any district or division in which it could have
been brought.” 28 U.S.C. § 1406(a). Based on my finding that RHUB is not subject to
personal jurisdiction in Iowa, venue is not appropriate in this district. See 28 U.S.C. §
1391.5 When both personal jurisdiction and proper venue are absent, a district court has
the authority to transfer venue to another district under Section 1406(a). See Goldlawr,
Inc. v. Heiman, 369 U.S. 463, 466 (1962) (holding that Section 1406(a) “is amply broad
Under Section 1391, venue is proper where a defendant “resides” and a corporate defendant
“resides” where it is subject to personal jurisdiction. See 28 U.S.C. § 1391(b)-(c).
enough to authorize the transfer of cases, however wrong the plaintiff may have been in
filing his case as to venue, whether the court in which it was filed had personal jurisdiction
over the defendants or not.”); see also Eggleton v. Plasser & Theurer Exp. Von
Bahnbaumaschinen Gesellschaft, MBH, 495 F.3d 582, 584 (8th Cir. 2007) (citing
Goldlawr for the proposition that Section 1406(a) “grants district courts the power to
transfer cases for lack of personal jurisdiction, as well as for improper venue”).
I find a transfer of venue, rather than dismissal, to be in the interests of justice.
RHUB argues that venue is appropriate in the Northern District of California because
RHUB resides in that District, preliminary negotiations of the CB Agreement took place
there and RHUB performed its services there. I agree. Accordingly, I find this case
should be transferred to the United States District Court for the Northern District of
California pursuant to 28 U.S.C. § 1406(a).
For the reasons stated herein:
RHUB’s motion (Doc. No. 9) and supplemental motion (Doc. No. 29) to
dismiss for lack of personal jurisdiction or, alternatively, transfer venue are granted in
part and denied in part. The motions are denied as to the request for dismissal but are
granted as to RHUB’s alternative request to transfer venue to the Northern District of
The Clerk shall transfer this case to the United States District Court for the
Northern District of California.
IT IS SO ORDERED.
DATED this 6th day of February, 2017.
LEONARD T. STRAND
UNITED STATES DISTRICT JUDGE
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