Wallace v. Mathias et al

Filing 19

MEMORANDUM AND ORDER - This matter is before the Court on defendant William R. Mathias Motion to Dismiss and/or Motion to Transfer (filing 14 ). The Court understands Mathias to be moving for dismissal pursuant to Fed. R. Civ. P. 12(b)(2) (lack o f personal jurisdiction) and Fed. R. Civ. P. 12(b)(3) (improper venue). And in the alternative, Mathias moves for a change of venue pursuant to 28 U.S.C. § 1404(a). For the reasons stated below, the Court denies all three motions. Ordered by Judge John M. Gerrard. (Copy mailed to pro se party)(GJG)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
ROGER WALLACE,
Plaintiff,

4:12-CV-3011

vs.
MEMORANDUM AND ORDER
WILLIAM R. MATHIAS and
HERINGTON LIVESTOCK
MARKET, INC.,
Defendants.
This matter is before the Court on defendant William R. Mathias’
Motion to Dismiss and/or Motion to Transfer (filing 14). The Court
understands Mathias to be moving for dismissal pursuant to Fed. R. Civ. P.
12(b)(2) (lack of personal jurisdiction) and Fed. R. Civ. P. 12(b)(3) (improper
venue). And in the alternative, Mathias moves for a change of venue
pursuant to 28 U.S.C. § 1404(a). For the reasons stated below, the Court
denies all three motions.
I. BACKGROUND
This is an enforcement action brought for an order of the Department of
Agriculture issued pursuant to the Packers and Stockyards Act, 7 U.S.C. §
181 et seq. For purposes of these motions, Mathias does not appear to be
disputing the underlying facts; therefore, the Court derives the following
narrative from the plaintiff’s pleadings and evidence, particularly the
findings of the Secretary of Agriculture.1
The plaintiff, Roger Wallace, is a cattle feeder in Elkhorn, Nebraska.
Filing 1 at 2. Mathias is a resident of Herington, Kansas, and at the time of
the events giving rise to this case was a cattle dealer in Herington. Filing 171 at 22. The other defendant, Herington Livestock Market (HLM) was a
corporation owned and operated by Mathias and his then-wife, based in

In enforcement actions such as these, “the findings and orders of the Secretary [of
Agriculture] shall be prima facie evidence of the facts therein stated . . . .” 7 U.S.C. § 210(f).
The Court views that provision as applicable both to jurisdiction and the merits.
1

Herington.2 Filing 17-1 at 22. HLM sold livestock on a commission basis.
Filing 17-1 at 22.
Wallace purchased cattle sold by HLM. The middleman for those
transactions was Doug Harrington, through Harrington Cattle Company,
L.L.C. (collectively, Harrington), based in Lincoln, Nebraska. Filing 17-1 at
23. Harrington had been buying cattle from HLM since HLM started
operating in 1990. Filing 17-1 at 23. Beginning in 1996, Harrington had been
cleared under Mathias’ bond; Harrington had an agreement to pay Mathias
50¢ per head for bonding services, but did not do so. Filing 17-1 at 23.
Harrington had also been buying cattle for Wallace at various locations for a
number of years. Filing 17-1 at 23.
The trouble began when Harrington bought 67 steers for Wallace from
HLM on July 5, 2000. Filing 17-1 at 23. HLM invoiced Harrington for
$45,553. Filing 17-1 at 23-24. Harrington, in turn, invoiced Wallace, adding
his commission for a total of $45,888. Filing 17-1 at 24. Wallace wired
payment to Harrington, who then wrote a check to HLM. Filing 17-1 at 24.
But Harrington’s check bounced. Filing 17-1 at 24. So, Wallace had paid
Harrington for the cattle, but Harrington had not paid HLM. HLM did not
inform Wallace at that time. Filing 17-1 at 25. Mathias and his wife each said
Harrington had told them that Wallace never paid him. Filing 17-1 at 28.
Harrington bought another 134 steers and 148 heifers for Wallace from
HLM on Wednesday, August 2, 2000, for $172,454.50. Filing 17-1 at 24. This
time, Wallace mailed a check to HLM directly. Filing 17-1 at 24. (It is not
clear why Wallace paid HLM directly on this sale, but not the previous one.)
On Monday, August 7, Mathias called Wallace and told him that the check
had not arrived. Filing 17-1 at 24. On August 8, Mathias called Wallace again
and asked that the money be wired to him, and Wallace wired $172,444.50
(the purchase price minus a wire transfer fee) to HLM. Filing 17-1 at 24.
According to Wallace, Mathias promised he would return Wallace’s
check after the wire transfer arrived. Filing 17-1 at 29. “‘Had they told me
they were not going to return my check,’” Wallace said, “‘I would never have
sent them another wire.’” Filing 17-1 at 29. But instead, on August 9, 2000,
Mathias deposited Wallace’s check. Filing 17-1 at 24. So, at this point,
Wallace had paid for the July 5 cattle, but Harrington had not paid HLM,
and Wallace had paid HLM twice for the August 2 cattle.
On August 9, 2000, Harrington bought another 65 heifers and 72 steers
from HLM for Wallace, for $89,063.40. Filing 17-1 at 24. Harrington invoiced
The Court notes Mathias’ representation in his motion that after the underlying events,
he and his wife divorced, he lost his ownership interest in HLM, and HLM was dissolved.
Filing 14 at 2. The Court does not view those facts as being relevant to the current motions.
2

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Wallace on August 10, and Wallace mailed a check directly to HLM on
August 12. Filing 17-1 at 24. But on August 15, Wallace’s bank informed him
that his account was overdrawn. Filing 17-1 at 24. Wallace stopped payment
on the check for the August 9 cattle. Filing 17-1 at 24. On the same day,
Wallace received a wire transfer from HLM in the amount of $37,830.60.
Filing 17-1 at 25. That amount, according to Mathias, represented what
Wallace was due back after payment for the July 5 and August 9 cattle had
been subtracted. Filing 17-1 at 25. (There seems to be a $2.50 discrepancy
that is immaterial at this point.) Mathias only informed Wallace of the
insufficient fund check he had received from Harrington after the wire
transfer and check for the August 2 cattle had both cleared. Filing 17-1 at 25.
So, at this point, HLM had received all the money it was due for all of
the purchases. (Whether it received that money from the right party is the
underlying issue in this case.) But, Wallace had paid for the July 5, 2000
cattle twice: once to Harrington, and once to HLM directly through its
deduction from his overpayment for the August 2 cattle. Wallace did receive
$10,000 from Harrington as a partial payment of the balance on the July 5
cattle. Filing 17-1 at 25. But that left $35,550.50 remaining. Harrington’s
debts were discharged in bankruptcy; he was not a party before the
Department of Agriculture, nor is he a party here. Filing 17-1 at 21.
The Packers and Stockyards Act prohibits every “unjust, unreasonable,
or discriminatory regulation or practice” in respect to the furnishing of
stockyard services. 7 U.S.C. § 208(a). And any person complaining of
anything done in violation of the Act may petition the Secretary of
Agriculture, who may then investigate the matter complained of. 7 U.S.C. §
210(a). If after a hearing on a complaint the Secretary determines that the
complainant is entitled to an award of damages, the Secretary shall make an
order directing the defendant to pay the complainant the sum to which he or
she is entitled. 7 U.S.C. § 210(e). In this case, Wallace filed a timely petition,
alleging that HLM and Mathias had engaged in an unjust and unreasonable
practice within the meaning of the Act. Filing 17-1 at 20; see, Rice v. Wilcox,
630 F.2d 586 (8th Cir. 1980); Rowse v. Platte Valley Livestock, Inc., 597 F.
Supp. 1055 (D. Neb. 1984).
A hearing was held on February 10, 2005, in Kansas City, Missouri.
Filing 17-1 at 21. The hearing officer found for Wallace. Given that
Harrington was out of the picture, the issue was who should bear the burden
of his wrongdoing. The hearing officer reasoned that U.C.C. § 2-403 was
applicable.3 Filing 17-1 at 31. Under that section, a person with voidable title
The hearing officer did not decide any choice of law question, observing that Nebraska and
Kansas law are substantially identical on this point. Filing 17-1 at 31; compare, Kan. Stat.
3

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has power to transfer a good title to a good faith purchaser for value. Neb.
U.C.C. § 2-403(1). When goods have been delivered under a transaction of
purchase, the purchaser has such power even though the delivery was in
exchange for a check which was later dishonored. Neb. U.C.C. § 2-403(1)(b).
And any entrusting of possession of goods to a merchant who deals in goods of
that kind gives him or her power to transfer all rights of the entruster to a
buyer in the ordinary course of business. Neb. U.C.C. § 2-403(2).
So, the hearing officer found that with respect to the July 5, 2000,
transaction, Harrington—who dealt in cattle—had ordered cattle from HLM.
Filing 17-1 at 32. HLM shipped the cattle and invoiced Harrington. Filing 171 at 32. Harrington paid HLM by check. Filing 17-1 at 32. HLM’s shipment of
the cattle was, the hearing officer reasoned, entrusting the goods to
Harrington, so Harrington could convey good title to Wallace. Filing 17-1 at
32. And Wallace was a buyer in the ordinary course of business. Filing 17-1
at 33; see Neb. U.C.C. 1-201(9). The primary issue contested at the hearing
was whether Harrington was actually an agent of Wallace (which would
make Wallace responsible for Harrington’s failure to pay); the hearing officer
found that under the facts, he was not. Filing 17-1 at 38.
In sum, Wallace had paid Harrington for the July 5, 2000, cattle and
acquired good title. And Wallace had an agreement with HLM not to
negotiate the check sent for the August 2 cattle, the consideration for which
was a wire transfer of money. Filing 17-1 at 29. HLM had breached that
agreement by cashing the check, and had refused to return all the money,
based on an invalid claim against Wallace. Filing 17-1 at 29. So, HLM’s
“offset” against the overpayment for the August 2 cattle was not legitimate.
Filing 17-1 at 41. The hearing officer, on behalf of the Secretary, ordered
Mathias and HLM to repay Wallace.4 A petition for reargument was filed, but
in a decision filed December 16, 2011,5 the hearing officer reaffirmed the
earlier findings and order. Filing 17-1 at 56.
When a defendant does not comply with an order for the payment of
money under the Act, the complainant may, within 1 year, file a petition “in
the district court of the United States for the district in which he resides or in
which is located the principal place of business of the defendant” setting forth
his or her claim, and the order of the Secretary. 7 U.S.C. § 210(f). “Such suit
in the district court shall proceed in all respects like other civil suits for
Ann. § 84-2-403; Neb. U.C.C. § 2-403. For convenience, the Court will simply cite to the
Nebraska statute.
4

The hearing officer found that Mathias and HLM had joint identity. Filing 17-1 at 26.

The record does not reveal why it took the Department of Agriculture, in the end, nearly 7
years to issue a final resolution of Wallace’s claim. This Court hopes to do better.
5

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damages except that the findings and orders of the Secretary shall be prima
facie evidence of the facts therein stated . . . .” Id. Wallace has timely filed a
petition for enforcement in this Court. Filing 1.
II. ANALYSIS
1. PERSONAL JURISDICTION
Mathias contends that Wallace’s petition should be dismissed pursuant
to Fed. R. Civ. P. 12(b)(2) because haling Mathias to court in Nebraska would
deny him due process. Mathias relies on the familiar 14th Amendment
minimum contacts analysis of International Shoe Co. v. Washington, 326 U.S.
310 (1945), and its progeny. There is, however, an initial question as to
whether those 14th Amendment standards apply in this case. Ultimately, the
Court concludes that they do. But getting there will take some explaining.
(a) Personal Jurisdiction When a Federal Claim is Asserted
The easiest place to begin explaining is probably with the U.S.
Supreme Court’s opinion in Omni Capital Int’l, LTD. v. Rudolf Wolff & Co.,
484 U.S. 97 (1987). In Omni Capital, a foreign company and citizen were
haled into court in the U.S. District Court for the District of Louisiana by two
investment companies that were being sued under the federal Commodity
Exchange Act. The issue was how personal jurisdiction over the foreign
respondents could be established in federal question litigation. The Court
agreed with the investment companies that in a federal question case, the
relevant constitutional limits on a federal district court’s power to exercise
personal jurisdiction flow from the due process clause of the 5th Amendment,
not the 14th Amendment. But to exercise personal jurisdiction, “[t]here also
must be a basis for the defendant’s amenability to service of summons.” Omni
Capital, 484 U.S. at 104.
The Court found no authorization to serve summons in that case. At
that time, Fed. R. Civ. P. 4 provided for service of process outside the state in
which the district court was held only where a federal statute authorized
such service, or under the state long-arm statute. In Omni Capital, it was
conceded that the requirements of the Louisiana long-arm statute were not
met, and the Court concluded that the Commodity Exchange Act did not
provide for nationwide service of process. So, the Court concluded, there was
no way for the investment companies to serve process in that case, and
therefore no personal jurisdiction over the respondents. Omni Capital, supra.
The Court noted the hardship that imposed, but suggested that any solution
would have to come from Congress. See id.
The response was Fed. R. Civ. P. 4(k), enacted in 1993. Rule 4(k)(1) now
provides, as relevant, that serving a summons or filing a waiver of service

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establishes personal jurisdiction over a defendant, “(A) who is subject to the
jurisdiction of a court of general jurisdiction in the state where the district
court is located;” or “(C) when authorized by a federal statute.” 6 And for a
claim that arises under federal law, Rule 4(k)(2) now provides that serving a
summons or filing a waiver of service establishes personal jurisdiction over a
defendant if (A) the defendant is not subject to jurisdiction in any state’s
courts of general jurisdiction; and (B) exercising jurisdiction is consistent
with the U.S. Constitution and laws.
Rule 4(k)(2) obviously closed the gap at issue in Omni Capital, by
which a defendant who was subject to the jurisdiction of the United States,
but not any particular state, could escape service of process. Instead, process
can be served on such defendants pursuant to Rule 4(k)(2), subject to the due
process clause of the 5th Amendment. See Chew v. Dietrich, 143 F.3d 24 (2d
Cir. 1998). But this is not a Rule 4(k)(2) case, because Mathias is subject to at
least one state’s courts of general jurisdiction: Kansas. So, jurisdiction in
Nebraska, if it exists, must be based on Rule 4(k)(1).
Rule 4(k)(1)(C) permits jurisdiction to be established by serving a
summons or filing a waiver when authorized by a federal statute. And in such
instances—when nationwide service of process is expressly authorized by a
federal statute—jurisdiction is again limited by the due process clause of the
5th Amendment, not the 14th Amendment. See Omni Capital, supra; see also,
e.g., In re Auto. Refinishing Paint Antitrust Litigation, 358 F.3d 288 (3d Cir.
2004) (collecting cases). Then, due process of law requires only that the
defendant has sufficient contacts with the United States, not the state in
which the district court is held. In re Federal Fountain, Inc., 165 F.3d 600
(8th Cir. 1999); Admin. Comm. of Wal-Mart Stores, Inc. Assocs’ Health and
Welfare Plan v. Soles, 204 F. Supp. 2d 1184 (W.D. Ark. 2002); see also, e.g.,
Paint Antitrust Litigation, supra. This is because due process of law relates to
the fairness of the exercise of power by a particular sovereign, and individual
liberty interests are not threatened when a federal district court sitting
pursuant to federal question jurisdiction exercises personal jurisdiction over
a defendant who has minimum contacts with the United States. Soles, supra;
see also Federal Fountain, supra. Any inconvenience to the defendant
associated with a particular forum can be addressed as a matter of venue. See
Federal Fountain, supra.
But contrary to Wallace’s argument, service of process is not authorized
by a federal statute in this case, so Rule (4)(k)(1)(C) is not in play. Wallace
relies upon 7 U.S.C. § 210(f) which, as noted above, permits a complainant
under the Packers and Stockyards Act to bring a petition in the home court of
6

Rule (4)(k)(1)(B) deals with joinder and impleader, and is not pertinent here.
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either the complainant or the defendant. But that is clearly a venue
provision, and does not discuss service of process. As the Supreme Court
stated in Omni Capital, supra, 484 U.S. at 411, “Congress knows how to
authorize nationwide service of process when it wants to provide for it. That
Congress failed to do so here argues forcefully that such authorization was
not its intention.” See, Dynegy Midstream Servs. v. Trammochem, 451 F.3d 89
(2d Cir. 2006); U.S. v. 51 Pieces of Real Property, 17 F.3d 1306 (10th Cir.
1994), superseded by statute, 28 U.S.C. § 1355, as recognized in U.S. v. One
1978 Piper Cherokee Aircraft, 91 F.3d 1204 (9th Cir. 1996); United States v.
Contents of Accounts Nos. 3034504504 and 144-07143, 971 F.2d 974 (3d Cir.
1992) (same). And this is not an instance in which the statute would lose all
practical effect unless authorization for service of process was implied. See,
Dynegy, supra; Contents of Accounts, supra; compare U.S. Int’l Trade Com’n
v. ASAT, Inc., 411 F.3d 245 (D.C. Cir. 2005).
In short, the Court declines to read 7 U.S.C. § 210(f) as authorizing
extrajurisdictional service of process in the absence of clear language to that
effect. So, that takes us back to Rule 4(k)(1)(A), which permits service of
summons or filing a waiver of service to establish personal jurisdiction over a
defendant who is subject to the jurisdiction of a court of general jurisdiction
in the state where the district court is located. And that, in turn, takes us
back to the 14th Amendment, because whether an out-of-state defendant is
subject to the jurisdiction of a state court is subject to (1) the state long-arm
statute, and (2) the demands of the 14th Amendment’s due process clause.
See, uBid, Inc. v. GoDaddy Grp., 623 F.3d 421 (7th Cir. 2010); Dudnikov v.
Chalk and Vermilion Fine Arts, Inc., 514 F.3d 1063 (10th Cir. 2008); Grand
River Enters. Six Nations, Ltd. v. Pryor, 425 F.3d 158 (2d Cir. 2005); Red
Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355 (Fed. Cir. 1998).
The Court recognizes some limited authority for the argument that
even where service is made under the forum state’s long-arm statute, a
federal court may exercise personal jurisdiction as long as such exercise is
consistent with a 5th Amendment due process standard. See Chew, supra,
143 F.3d at 27 n.3. The Court rejects that view for three reasons. First, it is
unsupported by the weight of authority cited above. Second, it is not at all
clear what differences a 5th Amendment analysis of state long-arm
jurisdiction might entail, and the Eighth Circuit has suggested that the
analyses might be the same. See Dakota Indus. v. Dakota Sportswear, Inc.,
946 F.2d 1384 (8th Cir. 1991), but cf. Federal Fountain, supra. There is no
reason to jettison the familiar rubric of International Shoe for something new.
And third—and most importantly—the International Shoe standards
are far more consistent with the plain language of Rule 4(k)(1)(A). Whether a
defendant is “subject to the jurisdiction of a court of general jurisdiction” in a
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state depends on the state’s long-arm statute and whether the defendant has
submitted to the state’s sovereign power through purposeful availment of the
privilege of conducting activities within the forum. See J. McIntyre
Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011). Simply put, Rule
4(k)(1)(A), when read literally, incorporates the 14th Amendment’s limitation
on state jurisdiction.
In sum: because this is a federal question case, the constitutional
limitation on the Court’s personal jurisdiction is imposed by the 5th
Amendment due process clause, not the 14th Amendment. But service of
process is also necessary to establish personal jurisdiction. See Omni Capital,
supra. In this case, the only basis for serving process is Rule 4(k)(1)(A). And
that rule incorporates the state long-arm statute and the limitations imposed
on state jurisdiction by the 14th Amendment due process clause, under
International Shoe and its progeny. So, it is to application of the Nebraska
long-arm statute and International Shoe that the Court turns.
(b) Long-Arm Statute/Purposeful Availment
The Nebraska long-arm statute provides, in relevant part, that a
Nebraska court may exercise personal jurisdiction over a person as to a cause
of action arising from the person contracting to supply services or things in
Nebraska, or who has any other contact with or maintains any other relation
to Nebraska to afford a basis for the exercise of personal jurisdiction
consistent with the Constitution of the United States. Neb. Rev. Stat. §§ 25536(1)(b) and 25-536(2). Mathias argues that the long-arm statute does not
apply to him, in part because the cattle eventually sold to Wallace were
physically purchased in Kansas. But Mathias is subject to § 25-536(1)(b) for
two reasons. First, the terms of the July 5, 2000, purchase involved shipping
the cattle to Wallace in Nebraska, i.e., “contracting to supply . . . things” in
Nebraska. And second, Wallace’s cause of action arises in part from the
August 2 purchase, in which Mathias sent the cattle to Nebraska, and
Wallace sent payment to Mathias from Nebraska. These transactions are
sufficient to establish jurisdiction under § 25-536(1)(b). See Kugler Co. v.
Growth Prods. Ltd., 658 N.W.2d 40 (Neb. 2003).
And in any event, § 25-536(2) expressly extends Nebraska’s jurisdiction
over nonresidents to the extent the U.S. Constitution permits. See, Stanton v.
St. Jude Medical, Inc., 340 F.3d 690 (8th Cir. 2003); Oriental Trading Co. v.
Firetti, 236 F.3d 938 (8th Cir. 2001); Kugler Co., supra. Therefore, the
inquiries under the long-arm statute and 14th Amendment are merged, and
the key question becomes whether the exercise of personal jurisdiction would
comport with 14th Amendment due process. Stanton, supra; Oriental
Trading, supra.

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When jurisdiction is challenged on a pretrial motion to dismiss, the
plaintiff need only make a prima facie showing of jurisdiction. Pangaea, Inc.
v. Flying Burrito LLC, 647 F.3d 741 (8th Cir. 2011); Miller v. Nippon Carbon
Co., 528 F.3d 1087 (8th Cir. 2008). The evidence is viewed in the light most
favorable to the plaintiff. Viasystems, Inc. v. EBM-Papst St. Georgen GmbH &
Co., 646 F.3d 589 (8th Cir. 2011). Nonetheless, if the defendant controverts or
denies jurisdiction, the plaintiff still carries the burden of proof. See, id.;
Wells Dairy, Inc. v. Food Movers Int’l, Inc., 607 F.3d 515 (8th Cir. 2010);
Miller, supra. The plaintiff’s prima facie showing must be tested, not by the
pleadings alone, but by the affidavits and exhibits presented with the
motions and opposition thereto. Miller, supra; Coen v. Coen, 509 F.3d 900
(8th Cir. 2007).
In order to satisfy the due process clause, a defendant must have
minimum contacts with the forum state such that the maintenance of the suit
does not offend traditional notions of fair play and substantial justice.
Pangaea, supra. The fundamental inquiry is whether the defendant has
purposefully availed itself of the benefits and protections of the forum state to
such a degree that it should reasonably anticipate being haled into court
there. Viasystems, supra. Purposeful availment is required to ensure that a
defendant will not be haled into a jurisdiction solely as a result of random,
fortuitous, or attenuated contacts, or the unilateral activity of another party
or a third person. Stanton, supra. Jurisdiction is proper, however, where the
contacts proximately result from actions by the defendant himself that create
a substantial connection with the forum state. Id.
The minimum contacts necessary for due process may be the basis for
either “general” or “specific” jurisdiction. Johnson v. Arden, 614 F.3d 785 (8th
Cir. 2010). A court obtains general jurisdiction 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. Specific jurisdiction over a defendant, on the other
hand, is exercised when a state asserts personal jurisdiction over a
nonresident defendant that has purposefully availed itself of the privilege of
conducting business in the forum in a suit arising out of or related to the
defendant’s contacts with the forum. See, Pangaea, supra; Johnson, supra.
The Eighth Circuit has set forth a five-part test for measuring a
defendant’s contacts with a forum state: (1) the nature and quality of the
contacts with the forum state, (2) the quantity of those 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) the convenience of the
parties. Wells Dairy, supra. The third factor distinguishes whether the
jurisdiction is general or specific. Johnson, supra. The first three factors are
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primary factors, and the remaining two are secondary. Id. And a court is to
look at all the factors in the aggregate and examine the totality of the
circumstances in determining personal jurisdiction. Id.
Although it is not entirely clear, Wallace does not appear to contend
that there is a basis for finding general jurisdiction in this case; therefore, the
Court considers whether specific jurisdiction exists over Mathias. See, Miller,
supra; Coen, supra. In doing so, the Court considers the nature and quality of
Mathias’ contacts with Nebraska, and their source and connection to
Wallace’s cause of action. See Miller, supra.
Mathias’ argument is simple: he alleges that he is a Kansas resident,
doing business in Kansas, and has no connection to Nebraska. He has no
office in Nebraska; the sales at issue took place in at his business in
Herington. And Mathias asserts that it would be inconvenient for him to
defend in Nebraska. Filing 14 at 1-2.
Wallace, on the other hand, points out that the cattle were purchased
by Wallace, a resident of Nebraska, by and through Harrington, also a
resident of Nebraska. And Mathias had a long history of dealing with both
Wallace and Harrington, as described in more detail above. See filing 16 at 78. The cattle were shipped to Nebraska, and payment sent from Nebraska.
Filing 16 at 8-9. And Wallace presents evidence that Mathias repeatedly
advertised in a publication called “Grass and Grain,” an agriculturally
focused newspaper published in central Kansas, but whose publication area
reached into southern Nebraska.7 See filing 17-1 at 5-19.
Standing alone, Mathias’ business dealings with Harrington and
Wallace present a questionable basis for exercising jurisdiction. The use of
such arteries as interstate mail, telephone, railway, and banking facilities are
insufficient, standing alone, to satisfy due process. Wells Dairy, supra. But
personal jurisdiction may also be asserted over nonresident defendants whose
acts are performed for the very purpose of having their consequences felt in
the forum state. Johnson, supra; Coen, supra. This “effects” test, based in
Calder v. Jones, 465 U.S. 783 (1984), provides that a defendant’s
extraterritorial tortious acts can serve as a source of personal jurisdiction
where the plaintiff makes a prima facie showing that the defendant’s acts (1)
The Court notes that none of the advertisements adduced by Wallace seem to have been
published at or before the time of the underlying events, or commencement of the
administrative action. And the rule is that minimum contacts must exist either at the time
the cause of action arose, the time the suit is filed, or within a reasonable period of time
immediately prior to the filing of the lawsuit. Steinbuch v. Cutler, 518 F.3d 580 (8th Cir.
2008). The Court does not view the “Grass and Grain” publications to be particularly
dispositive, however, and need not resolve whether the timing of their publication bears on
their relevance to the minimum contacts analysis.
7

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were intentional, (2) were uniquely or expressly aimed at the forum state,
and (3) caused harm, the brunt of which was suffered—and which the
defendant knew was likely to be suffered—in the forum state. Viasystems,
supra; Johnson, supra.8
The effects test is satisfied here, by Mathias’ conduct in soliciting a
wire transfer from Wallace, then negotiating Wallace’s check after having
agreed not to. Although that conduct was primarily evaluated by the
Department of Agriculture through the lens of contract law and the Uniform
Commercial Code, it was to support the conclusion that Mathias had engaged
in an “unjust [or] unreasonable . . . practice” in violation of 7 U.S.C. 208(a).9
In short, Mathias’ acts (1) were intentional, (2) were uniquely aimed at
Wallace in Nebraska, and (3) caused harm to Wallace, that Mathias knew
was likely to be suffered in Nebraska.
The Eighth Circuit’s decision in Oriental Trading, supra, is instructive.
In Oriental Trading, a Virginia resident approached Oriental Trading Co. on
behalf of Global Marketing Group, Inc., a Virginia corporation that sold
pencils and crayons. Oriental Trading is a Nebraska corporation in the
business of selling goods made in Asia. Global sent Oriental Trading a price
list, and Oriental Trading eventually entered into two contracts with Global
for the sale of a certain number of pencils and crayons at an established
price. See id.
Then Global made a new offer. Its officer told Oriental Trading that the
U.S. Customs Service was contemplating imposing additional duties on
pencils made in certain Chinese factories. Global suggested that it could
become the importer of record so it could switch factories and lower the cost
of the additional Customs duties. Global promised to deal directly with
Customs, pay all the duties, and simply bill Oriental Trading for them.
Global sent invoices to Oriental Trading that included $360,886.32 in duties,
telling Oriental Trading that this reflected the amount of money that was
being deposited with Customs so that Oriental Trading’s goods could be

This test does not supplant the five-part test set forth above; rather, the effects test simply
provides an additional factor to consider when evaluating a defendant’s relevant contacts
with the forum state. See Johnson, supra. In any event, the five-factor test “‘is not to be
mechanically applied.’” Pangaea, supra, 647 F.3d at 746 n.4.
8

The Court notes some controversy over whether Calder simply requires an intentional act,
or whether that intentional act must be tortious or “wrongful.” See Dudnikov, supra, citing
Yahoo! Inc. v. La Ligue Contre le Racisme Et L’Antisemitisme, 433 F.3d 1199 (9th Cir. 2006)
(en banc). The Court need not resolve that issue here, because even if Calder requires some
form of “wrongful” conduct, the Court is persuaded that a violation of 7 U.S.C. § 208(a)
would comply. See Dudnikov, supra.
9

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released. Oriental Trading paid by bank transfer. But Global simply
deposited the funds and used them for normal operating expenses. See id.
Eventually, Customs decided not to impose any additional duties, and
Oriental Trading contacted Global to inquire about a refund. Global promised
to get back to Oriental Trading, but never did, and none of the money was
ever returned. Global took the position that it had a right to retain the money
even if it was not used for Customs duties. Not surprisingly, Oriental Trading
sued Global, in Nebraska, and after Global was dissolved, Oriental Trading
sued its directors and officers, again in Nebraska. The defendants moved to
dismiss for lack of personal jurisdiction, but the district court overruled their
motion, and Oriental Trading prevailed at a jury trial. See id.
On appeal, the Eighth Circuit affirmed the district court’s decision. The
defendants argued that they did not have minimum contacts with Nebraska
because they never entered the state and only made phone calls and faxes
into Nebraska. But, the Eighth Circuit noted, “[t]he lack of physical presence
in a state cannot alone defeat jurisdiction.” Id. at 943. And the litigation, the
court found, arose out of “what the jury found to be [the defendants’]
intentional tortious acts directed at residents of Nebraska where the brunt of
the harm was felt.” Id., citing Calder, supra. The Eighth Circuit reasoned
that the defendants had initiated a business relationship with Oriental
Trading and negotiated contracts with Global. They had contacted Oriental
Trading in Nebraska and proposed the mechanism by which Oriental
Trading would forward funds to Global, supposedly for Customs duties. Their
contacts with Nebraska were meant to implement that scheme. “By purposely
directing their fraudulent communications at residents of Nebraska,” the
Eighth Circuit concluded, “the defendants should have realized that the
brunt of the harm would be felt there, and they should have reasonably
anticipated being haled into court there.” Id. (citations omitted).
The same principles apply in this case. Mathias established a longstanding business relationship with two Nebraska residents, Harrington and
Wallace. Then, so far as the evidence currently before the Court on these
motions would indicate, he reached into Nebraska, to Wallace, and solicited a
double payment as “self-help” (perhaps under false pretenses) after
Harrington’s check for a previous transaction was dishonored. Then,
according to the current record, he wrongfully retained part of the proceeds—
an unjust or unreasonable practice in violation of the Packers and Stockyards
Act. He should not have been surprised to be sued in Nebraska.
That conduct weighs heavily in favor of finding that Mathias
purposefully availed himself of the privilege of doing business in Nebraska,
when the nature and quality of Mathias’ contacts with Nebraska are
considered, along with the relation of Wallace’s cause of action with those
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contacts. See Wells Dairy, supra. And Nebraska obviously has a strong
interest in providing a forum for its residents when they suffer the effects of
intentional, wrongful acts in Nebraska. See id. Mathias’ bare assertion that it
is inconvenient for him to defend in Nebraska does not outweigh those
factors, when they are considered in the aggregate, and the totality of the
circumstances is examined. See Johnson, supra.
In short, the Court finds that personal jurisdiction over Mathias is
proper in Nebraska. Mathias’ Rule 12(b)(2) motion will be denied.
2. VENUE
In the alternative, Mathias makes two arguments with respect to
venue. The first is that venue is improper under 28 U.S.C. § 1391, the general
venue statute. The Court construes this as a motion to dismiss pursuant to
Rule 12(b)(3). But Mathias’ argument is quickly disposed of.
28 U.S.C. § 1391 provides that:
[a] civil action wherein jurisdiction is not founded solely on
diversity of citizenship may, except as otherwise provided by law,
be brought only in (1) a judicial district where any defendant
resides, if all defendants reside in the same State, (2) a judicial
district in which a substantial part of the events or omissions
giving rise to the claim occurred, or a substantial part of property
that is the subject of the action is situated, or (3) a judicial
district in which any defendant may be found, if there is no
district in which the action may otherwise be brought.
(Emphasis supplied.) The key words are “except as otherwise provided by
law” because, as explained above, the Packers and Stockyards Act provides
for venue in the district in which the complainant resides—in this case,
Nebraska. See 7 U.S.C. § 210(f). Therefore, venue in Nebraska is not
improper, and Mathias’ Rule 12(b)(3) motion will be denied.
Mathias also moves for a change of venue pursuant to 28 U.S.C. §
1404(a), which provides that “[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 or division where it might have been brought . . . .” Mathias
seeks transfer to Kansas.
But the Eighth Circuit has explained that, in general, federal courts
give considerable deference to a plaintiff’s choice of forum; therefore, the
party seeking a transfer under 28 U.S.C. § 1404(a) typically bears the burden
of proving that a transfer is warranted. In re Apple, Inc., 602 F.3d 909 (8th
Cir. 2010). And a transfer motion requires the court to consider the

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convenience of the parties, the convenience of the witnesses, the interests of
justice, and any other relevant factors when comparing alternative venues.
Terra Intern., Inc. v. Miss. Chem. Corp., 119 F.3d 688 (8th Cir. 1997).
There is very little presented here to support Mathias’ motion to
transfer. He simply asserts that defending in Nebraska would be
inconvenient to him, but does not explain why it would be particularly
inconvenient. And presumably, litigating in Kansas would be at least equally
inconvenient to Wallace. There is little in the record at this point to establish
what other proceedings may be necessary. When the relevant factors are
considered, see Terra Intern., supra, the record is insufficient for Mathias to
carry his burden of proving that transfer is warranted. See Apple, supra.
Therefore, his 28 U.S.C. § 1404(a) motion will also be denied.
III. CONCLUSION
For the foregoing reasons, the Court finds that personal jurisdiction
and venue are appropriate in Nebraska. Accordingly,
IT IS ORDERED:
1.

Mathias’ Fed. R. Civ. P. 12(b)(2) motion is denied.

2.

Mathias’ Fed. R. Civ. P. 12(b)(3) motion is denied.

3.

Mathias’ 28 U.S.C. § 1404(a) motion is denied.

Dated this 17th day of May, 2012.
BY THE COURT:

John M. Gerrard
United States District Judge

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