Cargill Meat Solutions Corporation v. Premium Beef Feeders, LLC et al

Filing 23

MEMORANDUM AND ORDER denying 12 Motion to Change Venue; denying 12 Motion to Dismiss for Lack of Jurisdiction. Signed by District Judge Eric F. Melgren on 1/15/2014. (cm)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS

CARGILL MEAT SOLUTIONS
CORPORATION,
Plaintiff,

vs.

Case No. 13-CV-1168-EFM-DJW

PREMIUM BEEF FEEDERS, LLC and
POWER PLUS BEEF FEEDERS, LLC
d/b/a POWER PLUS FEEDERS, LLC,
Defendants.

MEMORANDUM AND ORDER
This matter comes before the Court on Defendant’s Motion to Dismiss for Lack of
Personal Jurisdiction and Alternative Motion to Transfer Venue for Convenience. Defendant
asks the Court to dismiss the complaint for lack of personal jurisdiction under Rule 12(b)(2) and
seeks to transfer this case to the United States District Court for the Western District of
Oklahoma under 28 U.S.C. § 1404(a). For the reasons stated below, the Court denies both
motions.
I.

Factual and Procedural Background

On May 24, 2011, Plaintiff Cargill Meat Solutions Corporation (“Cargill”) and
Defendants Premium Beef Feeders, LLC (“PBF”) and Power Plus Beef Feeders, LLC (“PPF”)
(collectively “Defendants”) entered into a Cattle Procurement and Feeding Agreement

(“Agreement”). The Agreement formalized a collaborative effort to procure and feed cattle, with
all three parties sharing in the ownership, profits, and losses of the operation. Cargill is a
corporation with its headquarters in Wichita, Kansas, and Defendants are Oklahoma limited
liability corporations. Cargill initially asserted this action in Kansas state court, but Defendants
removed the action to this Court.
II.

Legal Standard

A. Motion to Dismiss for Lack of Personal Jurisdiction
A plaintiff opposing a motion to dismiss based on lack of personal jurisdiction bears the
burden of showing that jurisdiction over the defendant is appropriate.1 In a pretrial motion to
dismiss, when the matter is decided on the basis of affidavits and written materials, the plaintiff
is only required to make a prima facie showing that personal jurisdiction is proper to avoid
dismissal.2 Once the plaintiff makes a prima facie showing, the defendant must “present a
compelling case demonstrating ‘that the presence of some other considerations would render
jurisdiction unreasonable.’”3
“The allegations in the complaint must be taken as true to the extent they are
uncontroverted by the defendant’s affidavits. If the parties present conflicting affidavits, all
factual disputes must be resolved in the plaintiff’s favor, and the plaintiff’s prima facie showing
is sufficient notwithstanding the contrary presentation by the moving party.”4 “However, only
1

Thermal Components Co. v. Griffith, 98 F. Supp. 2d 1224, 1227 (D. Kan. 2000) (citing Kuenzle v. HTM
Sport–Und Freizeitgerate AG, 102 F.3d 453, 456 (10th Cir. 1996)).
2

Id.

3

Id. at 1227 (citing OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1091 (10th Cir.

4

Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995) (internal quotations omitted).

1998)).

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the well pled facts of plaintiff’s complaint, as distinguished from mere conclusory allegations,
must be accepted as true.”5 “The plaintiff has the duty to support jurisdictional allegations in a
complaint by competent proof of the supporting facts if the jurisdictional allegations are
challenged by an appropriate pleading.”6
B. Motion to Transfer
“For the convenience of parties and witnesses, in the interest of justice, a district court
may transfer any civil action to any other district or division where it might have been
brought . . . .”7 A district court enjoys greater discretion to transfer a case under § 1404(a) than to
dismiss the action based upon forum non conveniens.8 A court should decide motions to transfer
on an individualized, case-by-case basis.9 “The party moving to transfer a case pursuant to
§ 1404(a) bears the burden of establishing that the existing forum is inconvenient.”10 “Merely
shifting the inconvenience from one side to the other, however, obviously is not a permissible
justification for a change of venue.”11 Unless the balance of interests “is strongly in favor of the
movant the plaintiff’s choice of forum should rarely be disturbed.”12

5

Id.

6

Id. at 1508 (quoting Pytlik v. Prof’l Res., Ltd., 887 F.2d 1371, 1376 (10th Cir. 1989)).

7

28 U.S.C. § 1404(a).

8

Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1515 (10th Cir. 1991).

9

Id. at 1516.

10

Id.

11

Id. (quoting Scheidt v. Klein, 956 F.2d 963, 965 (10th Cir. 1992)).

12

Scheidt, 956 F.2d at 965 (quoting William A. Smith Contracting Co. v. Travelers Indem. Co., 467 F.2d
662, 664 (10th Cir. 1972)).

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III.

Analysis

A. Motion to Dismiss
“Where a federal lawsuit is based on diversity of citizenship, the court’s jurisdiction over
a nonresident defendant is determined by the law of the forum state.”13 The party seeking to
establish personal jurisdiction over a diverse litigant must make two showings. First, it must
show that jurisdiction is legitimate under the state’s long-arm statute. Second, it must show that
jurisdiction does not offend the due process clause of the Fourteenth Amendment.14 The Kansas
Supreme Court has interpreted Kansas’ long-arm statute to extend jurisdiction to the fullest
extent allowed by the Due Process Clause of the Fourteenth Amendment.15 Thus, in this case,
the Court need not conduct statutory analysis apart from the due process analysis.16
The due process analysis involves a two-step inquiry.17 First, the plaintiff must show that
the nonresident defendants have “minimum contacts” with the forum state by demonstrating that
they purposefully availed themselves of the protections or benefits of the state’s laws, such that
they should reasonably anticipate being haled into court there.18 If the plaintiff successfully
establishes such minimum contacts, the burden shifts to the defendant to prove that the exercise

13

Marcus Food Co. v. DiPanfilo, 671 F.3d 1159, 1166 (10th Cir. 2011).

14

Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 455 (10th Cir. 1996).

15

Merriman v. Crompton Corp., 146 P.3d 162, 179 (Kan. 2006).

16

Employers Mut. Cas. Co., 618 F.3d at 1159.

17

AST Sports Sci., Inc. v. CLF Distribution Ltd., 514 F.3d 1054, 1057 (10th Cir. 2008).

18

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). See also Hanson v. Denckla, 357
U.S. 235, 253 (1958) (“[I]t 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.”).

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of jurisdiction would offend “traditional notions of fair play and substantial justice.”19 The
second inquiry is commonly referred to as the “reasonableness” test.
1. Minimum Contacts
The Constitutional touchstone of the Due Process Clause is whether the defendant
purposefully established minimum contacts in the forum State.20

The minimum contacts

requirement assures a reasonable expectation in the out-of-state defendant that they might be
brought into court in the forum state.21 This requirement ensures “that a defendant will not be
subject to the laws of a jurisdiction ‘solely as a result of random, fortuitous, or attenuated
contacts, or of the unilateral activity of another party or a third person.’”22 To meet this standard,
a plaintiff must show either specific or general jurisdiction.23 The Court may exercise specific
personal jurisdiction if the case arises directly from or relates to the defendant’s Kansas-related
activities.24 The Court may exercise general jurisdiction if the defendants maintain “continuous
and systematic” contacts with Kansas.25
Cargill argues that Defendants purposefully availed themselves of the privileges of
conducting activities in Kansas by entering into a contract with a Kansas resident to be
performed in Kansas. Cargill cites the accounting and risk management tasks that they have
19

Asahi Metal Indus. Co., Ltd. v. Superior Court of California, Solano Cnty., 480 U.S. 102, 113 (1987); see
also AST Sports Sci., Inc., 514 F.3d at 1057.
20

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985).

21

AST Sports Sci., Inc., 514 F.3d at 1057-58.

22

Id. (quoting Burger King Corp., 471 U.S. at 475).

23

OMI Holdings, Inc., 149 F.3d at 1090-91.

24

Payless Shoesource, Inc. v. Shops at Hancock, LLC, 2012 WL 1344977 at *2 (D. Kan. April 18, 2012).

25

Id. (quoting OMI Holdings, Inc., 149 F.3d at 1090-91).

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completed in Kansas pursuant to the contract and highlighted the frequency of the calling,
mailing, and e-mailing directed by Defendants to Cargill in Kansas (including payments to
Kansas for losses).26 They also argue that the choice of law provision designating Kansas law as
controlling further establishes personal jurisdiction.27 According to Cargill, the choice of law
provision is evidence that Defendants purposefully sought the protection of Kansas law and
should have reasonably foreseen the possibility of being haled into a Kansas court.28
Defendants argue that their contractual relationship with Cargill lacks a substantial
connection to Kansas that is necessary to give rise to personal jurisdiction. Defendants argue
that an overwhelming majority of activities related to the contract took place in Oklahoma and
Texas, not Kansas. They argue that calls, letters, and e-mails alone are not sufficient to establish
jurisdiction. In sum, they claim that they have not purposefully availed themselves of Kansas
and therefore lack the minimum contacts necessary to establish specific personal jurisdiction.
Defendants are correct that the mere existence of a contract with a Kansas citizen is not
enough to establish minimum contacts.29 They are also correct that “phone calls and letters are
not necessarily sufficient in themselves to establish minimum contacts.”30 The same is true for
the number and frequency of communications and payments made to the forum state.31 Courts

26

Id.

27

Id.

28

Id.

29

See Burger King Corp., 471 U.S. at 478; TH Agric. & Nutrition, LLC v. Ace European Grp. Ltd., 488
F.3d 1282, 1287 (10th Cir. 2007).
30

Far W. Capital, Inc. v. Towne, 46 F.3d 1071, 1077 (10th Cir. 1995).

31

Continental American Corp. v. Camera Controls Corp., 692 F.2d 1309, 1314 (10th Cir. 1982) (“It is
fundamental that the mere quantum of contacts between the forum and the defendant is not determinative.”).

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have also ruled that choice of law provisions, standing alone, are insufficient to confer
jurisdiction.32 The Court finds that none of these individual facts are enough to establish
minimum contacts.
However, the Court finds that all of the facts taken together support the finding of
sufficient minimum contacts. These facts, while not dispositive in themselves, are not dismissed
in isolation. They are combined to determine whether a defendant has purposefully availed itself
to the forum such that it should reasonably anticipate being haled into court there.33 Even though
the existence of the contract alone is not dispositive, “parties who reach out beyond one state and
create continuing relationships and obligations with citizens of another state are subject to
regulation and sanctions in the other state.”34

Here, Defendants sought Cargill’s business.

Defendants negotiated with Cargill until a contract was formed. Defendants continued their
contractual relationship and obligations for well over a year as evidenced by payments and
frequent communication with the Kansas plaintiff.

The choice of law provision further

reinforces Defendant’s deliberate affiliation with Kansas and the reasonable foreseeability of
litigation there.35

Thus, the Court finds that Cargill has asserted facts demonstrating that

Defendants have committed acts which establish minimum contacts with the state of Kansas.

32

Burger King Corp., 471 U.S. at 482.

33

Id. at 473-76.

34

TH Agric. & Nutrition, LLC, 488 F.3d at 1287.

35

Burger King Corp., 471 U.S. at 482.

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2. Fair Play and Substantial Justice
Having established Defendant’s minimum contacts, the Court must determine whether
exercising jurisdiction over Defendants would offend “traditional notions of fair play and
substantial justice.”36 At this point, the burden shifts to Defendants to “present a compelling
case that the presence of some other considerations would render jurisdiction unreasonable.”37
The weight of the burden on Defendants is inversely proportionate to the strength of the
minimum contacts.38 The weaker the defendant’s minimum contacts, the less the defendant must
show to prove unreasonableness.39 Conversely, the stronger the minimum contacts, the more the
defendant must show to prove unreasonableness.40 However, when a non-resident defendant has
purposefully directed activities toward the forum state, it must “present a compelling case that
the presence of some other considerations would render jurisdiction unreasonable.”41
In weighing the reasonableness of exercising jurisdiction, courts traditionally consider the
following five factors: (1) the burden on the defendant, (2) the forum state’s interest in resolving
the dispute, (3) the plaintiff’s interest in receiving convenient and effective relief, (4) the
interstate judicial system’s interest in obtaining the most efficient resolution of controversies,

36

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980).

37

Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d 1063, 1080 (10th Cir. 2008) (quoting Pro
Axess, Inc. v. Orlux Distribution, Inc., 428 F.3d 1270, 1280 (10th Cir. 2005)).
38

OMI Holdings, Inc., 149 F.3d at 1091-92.

39

Id. (quoting Ticketmaster-New York, Inc. v. Alioto, 26 F.3d 201, 210 (1st Cir. 1994)); accord Burger
King Corp., 471 U.S. at 477.
40

See id.

41

Burger King Corp., 471 U.S. at 483-84; see also Chem-Trol, Inc. v. Christensen, 2009 WL 1044613 at

*5.

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and (5) the shared interest of the several states in furthering fundamental social policies.42
Defendants have availed themselves of the privileges of conducting business in the state of
Kansas by pursuing an agreement with a Kansas citizen and creating continuing obligations
under the agreement. These acts establish a presumption that it is not unreasonable to require
Defendants to submit to the burdens of litigation in Kansas.43
Regarding the first factor, Defendants argue they would face a heavy burden should the
action be adjudicated in Kansas because the Agreement was not performed “in full or even in
part in the state of Kansas.”44 They claim that all witnesses and substantial documentation are
located in Oklahoma and Texas. For these reasons, the Court agrees with Defendants that
litigating in Kansas will impose a burden on them. However, by traveling to Kansas on multiple
occasions to meet with Plaintiff regarding the contract, Defendants have demonstrated that
traveling to Kansas is not “gravely difficult and inconvenient.”45 In addition, “defending a suit
in a foreign jurisdiction is not as burdensome as in the past,” especially for a sophisticated
business.46

Therefore, the Court finds that this factor weighs only slightly in favor of

Defendants.

42

Pro Axess, Inc. v. Orlux Distribution, Inc., 428 F.3d 1270, 1279-80 (10th Cir. 2005).

43

Burger King Corp., 471 U.S. at 475-76 (“[w]here the defendant “deliberately” has engaged in significant
activities within a State, or has created “continuing obligations” between himself and residents of the forum, he
manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded
by “the benefits and protections” of the forum’s laws it is presumptively not unreasonable to require him to submit
to the burdens of litigation in that forum as well.”).
44

Defendants’ Brief in Support of its Motion to Dismiss Plaintiff’s Complaint and/or Motion to Transfer
Venue under 28 U.S.C. § 1404 at *13.
45

Burger King Corp., 471 U.S. at 478 (emphasis added) (quotation marks and citations omitted).

46

Cont’l Am. Corp. v. Camera Controls Corp., 692 F.2d 1309, 1314 (10th Cir. 1982); see also AST Sports
Sci., Inc., 514 F.3d at 1061.

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The second factor in the reasonableness inquiry involves the forum state’s interest in
resolving the dispute.47 “States have an important interest in providing a forum in which their
residents can seek redress for injuries caused by out-of-state actors.”48 Kansas has an interest in
governing contracts entered into by corporations headquartered in this state.49 In addition,
Kansas has an interest where resolution of the dispute requires a court to apply Kansas law.50
Here, Defendants entered a contract with a Kansas resident and agreed that Kansas law would
govern the Agreement. This factor weighs heavily in favor of Plaintiff.
The third factor is the plaintiff’s interest in receiving convenient and effective relief.51
Plaintiff is a Kansas citizen who claims that a number of important witnesses and documents
relating to this action are located in the state of Kansas. Therefore, litigating this claim in
another forum would be burdensome on Plaintiff.52 This factor weighs in favor of Plaintiff.
The fourth factor involves the interstate judicial system’s interest in obtaining the most
efficient resolution of controversies.53 “The key points to consider when evaluating this factor
are (1) the location of witnesses, (2) the location of the wrong underlying the lawsuit, (3) what
forum’s law applies, and (4) ‘whether jurisdiction is necessary to prevent piecemeal
47

Pro Axess, 428 F.3d at 1279.

48

Burger King Corp., 471 U.S. at 483.

49

Universal Premium Acceptance Corp. v. Oxford Bank & Trust, 227 F. Supp. 2d 1120, 1128 (D. Kan.

2003).
50

OMI Holdings, Inc., 149 F.3d at 1096 (“The state’s interest is also implicated where resolution of the
dispute requires a general application of the forum state’s law.”).
51

Pro Axess, 428 F.3d at 1279.

52

Cf. Chem-Trol, Inc., 2009 WL 1044613 at *5 (holding that litigating a claim in another forum is
burdensome on the plaintiff because the plaintiff, its employees, a number of its witnesses, and a number of its
documents are all located in Kansas).
53

Pro Axess, 428 F.3d at 1279.

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litigation.’”54

Plaintiff claims their documents and witnesses are located in Kansas and

Defendants claim their documents and witnesses are in Oklahoma and Texas. Therefore, the first
point does not favor one party more than the other. The second point favors Defendants because
the alleged breach giving rise to this action – Defendants’ failure to send payments to Plaintiff –
occurred in Oklahoma. The third point favors Plaintiff because Kansas law applies pursuant to
the contract’s choice of law provision. The fourth point is neutral because neither jurisdiction
would create piecemeal litigation. Overall, the fourth factor does not favor either party.
The fifth factor for the Court’s consideration is the shared interest of the several states in
furthering fundamental social policies.55 Neither party contends this factor is relevant in the
determination of this case and therefore the Court does not address it.
After considering the above factors, the Court finds that exercising personal jurisdiction
over Defendants will not offend traditional notions of fair play and substantial justice.
Defendants argue jurisdiction is unreasonable because a vast majority of the contract was
performed in Oklahoma, the breach occurred in Oklahoma, and their witnesses and documents
are located in Oklahoma. However, the facts that establish a presumption of reasonableness are
not overcome by these considerations.56 Defendants willfully entered an agreement with a
Kansas citizen, agreed to use Kansas law to settle disputes under the agreement, and traveled to
Kansas to discuss the agreement with Plaintiff. Furthermore, Kansas courts have an in interest in
governing contracts by corporations headquartered in this state. Defendants have failed to
54

Id. (quoting OMI Holdings, Inc., 149 F.3d at 1097).

55

Pro Axess, 428 F.3d at 1279-80.

56

Piper Aircraft Co., 454 U.S. at 255-56 (Holding that the strong presumption in favor of the plaintiff’s
choice of forum “may be overcome only when the private and public interest factors clearly point towards trial in the
alternative forum.”).

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overcome the presumption of reasonableness. Therefore, the Court finds that exercising personal
jurisdiction over Defendants is reasonable and proper.
B. Motion to Transfer Venue
Motions to transfer venue are governed by 28 U.S.C. § 1404. The statute provides: “[f]or
the convenience of parties and witnesses, in the interest of justice, a district court may transfer
any civil action to any other district of division where it might have been brought.”57 As an
initial matter, it is not disputed that the Western District of Oklahoma is a district where this case
could have initially been brought. Accordingly, the first requirement for transfer is met, and this
Court must consider whether convenience to the parties and witnesses and the interests of justice
compel transfer. A permissive transfer under this provision “lies within the sound discretion of
the district court.”58 The party moving to transfer bears the burden of showing that the current
forum is inconvenient.59 “Unless the balance is strong in favor of the movant, the plaintiff’s
choice of forum should rarely be disturbed.”60
The Court considers the following factors in its determination: (1) the plaintiff’s choice
of forum; (2) the accessibility of witnesses and other sources of proof, including the availability
of compulsory process to insure attendance of witnesses; (3) the cost of making the necessary
proof, (4) questions as to the enforceability of a judgment if one is obtained; (5) relative
advantages and obstacles to a fair trial; (6) difficulties that may arise from congested dockets; (7)

57

28 U.S.C. § 1401(a).

58

Peterson v. Moldofsky, 2008 WL 2859184, at *4 (D. Kan. July 23, 2008); Texas Gulf Sulphur Co. v.
Ritter, 371 F.2d 145, 147 (10th Cir. 1967).
59

Thermal Components, 98 F. Supp. 2d at 1232 (citing Chrysler Credit Corp., 928 F.2d at 1516).

60

Id. (citing Scheidt v. Klein, 956 F.2d 963, 965 (10th Cir. 2012)).

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the possibility of the existence of questions arising in the area of conflict of laws; (8) the
advantage of having a local court determine questions of local law; and (9) all other
considerations of a practical nature that make a trial easy, expeditious and economical.61
Having considered each factor, the Court finds that the Defendants have not met their
burden of showing that a transfer of venue is justified under the facts of this case. The Court
believes that Plaintiff has simply chosen its home forum, the same forum whose law
undisputedly applies to this case.

This decision is accorded great weight.62

Although

Defendants claim that a majority of witnesses and documents are located in Oklahoma and/or
Texas, the Court does not find the balance so strongly in their favor that the plaintiff’s choice of
forum should be disturbed.63

Furthermore, modern transportation and communications

technology have significantly decreased the difficulties and burdens associated with interstate
travel.64 The Court therefore finds the Plaintiff’s choice of venue proper and a transfer to
Oklahoma unwarranted.

61

Thermal Components, 98 F. Supp. 2d at 1232 (citing Chrysler Credit Corp., 928 F.2d at 1516).

62

Allstate Ins. Co. v. Employers Reinsurance Corp., 715 F. Supp. 1502, 1502-03 (D. Kan. 1989); Piper
Aircraft Co. v. Reyno, 454 U.S. 235, 255-56 (1981) (“When the home forum has been chosen, it is reasonable to
assume that this choice is convenient.”).
63

Sprint Commc’ns, L.P. v. Cox Commc’ns, Inc., 896 F. Supp. 2d 1049, 1065 (D. Kan. 2012) (“[U]nless
the balance is strongly in favor of the movant[,] the plaintiff’s choice of forum should rarely be disturbed.”).
64

Chem-Trol, Inc., 2009 WL 1044613 at *7.

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IT IS ACCORDINGLY ORDERED this 15th day of January, 2014, that Defendant’s
Motion to Dismiss Plaintiff’s Complaint or, alternatively, Motion to Transfer Venue Under 28
U.S.C. § 1404 (Doc. 12) is hereby DENIED.
IT IS SO ORDERED.

ERIC F. MELGREN
UNITED STATES DISTRICT JUDGE

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