Cambridge Towel Company Inc v. Zimmer America Corporation et al

Filing 63

ORDER granting 42 Motion to Compel Arbitration as to Defendant Zimmer America Corporation, finding as moot as to Anglada; granting 42 Motion to Stay Proceedings as to Defendant Zimmer America Corporation, finding as moot as to Anglada; granting 49 Motion for Summary Judgment. Signed by Honorable G Ross Anderson, Jr on 11/9/15.(alew, )

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH CAROLINA
SPARTANBURG DIVISION
Cambridge Towel Company, Inc.,

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Plaintiff,
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v.
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Zimmer America Corporation, and
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Juame Anglada Viñas, S.A.,
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Defendants. )
________________________________ )

C/A No.: 7:14-cv-04089

ORDER
(Written Opinion)

Pending before the Court is Defendant Juame Anglada Viñas, S.A.’s (“Anglada”),
Motion for Summary Judgment for Lack of Personal Jurisdiction pursuant to Federal
Rule of Civil Procedure 56 and Plaintiff Cambridge Towel Company, Inc.’s
(“Cambridge”) Motion to Compel Arbitration. Anglada’s Motion for Summary Judgment
is GRANTED because, for the reasons stated below, the Court lacks personal
jurisdiction over Anglada. Accordingly, Cambridge’s Motion to Compel Arbitration and
Stay Proceedings is moot as to Anglada, and GRANTED as to Defendant Zimmer
America Corporation (“Zimmer”).
Background and Procedural History
Cambridge is a Canadian corporation engaged in the business of manufacturing
and selling woven and printed terry towels. ECF No. 7 at 1–2. Zimmer is a South
Carolina corporation that has a history of “assisting companies in the textile industry by
supplying, installing, and servicing textile machinery.” ECF No. 54-1. Anglada is a

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Spanish corporation engaged in the business of manufacturing textile machinery and
equipment. ECF No. 51.
In 2013, Zimmer contacted David Hamby (“Mr. Hamby”), the President of
Operations for Cambridge, to discuss Cambridge’s need for a dryer. ECF No. 54-2, ¶¶ 1
& 2. Mr. Hamby had several conversations with Zimmer personnel, including Bob
Patterson (“Mr. Patterson”), who led Mr. Hamby to believe that Zimmer was Anglada’s
North American sales agent. ECF No. 54-2, ¶¶ 6 & 7. Following these conversations,
Mr. Hamby and Dan Tamkin (“Mr. Tamkin”), the CEO of Cambridge, travelled to
Anglada’s plant in Llagosta, Spain where they met with Mr. Patterson and Juame
Anglada (“Mr. Anglada”) to witness trial runs of Anglada’s equipment and discuss
Cambridge’s requirements and specifications. ECF No. 54-2 at 3. Mr. Hamby engaged
in negotiations with Mr. Anglada for the specifications and requirements of the dryer,
structure of the sale, and purchase price of the dryer, after which Mr. Hamby states he
orally agreed to purchase an Anglada dryer. ECF No. 52-1, ¶ 9. Specifically, Mr. Hamby
states that Mr. Anglada “insisted and required that the sale be routed through Zimmer”
and that Zimmer agreed to purchase the dryer with the specifications discussed
between Mr. Hamby and Mr. Anglada, for purposes of reselling it to Cambridge. ECF
No. 52-1, ¶ 8.
Following the visit to Spain, a purchase order was entered for the sale of the
dryer from Anglada to Zimmer, for immediate resale to Cambridge. ECF No. 54-2; ECF
No. 54-5. Zimmer’s written contract with Anglada stated that the “end user” was
Cambridge. ECF No. 54-2. Additionally, the Anglada-Zimmer contract contained a forum
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selection clause designating the courts of Barcelona, Spain for the resolution of any
disputes that might arise out of Anglada’s contract with Zimmer. ECF No. 54-4 at 6.
Subsequently, Zimmer entered into a written contract with Cambridge for the resale of
the dryer. ECF No. 51-2. Paragraph 8.1 of the written Zimmer-Cambridge contract
states that “all claims, disputes, and controversies arising out of or relating to this
agreement…shall, in lieu of court action, be submitted to arbitration” in Spartanburg,
South Carolina. ECF No. 42. Under the terms of these two contracts, Zimmer was to
pay Anglada for the dryer, and Cambridge was to pay Zimmer. See ECF No. 54-2; ECF
No. 54-5. However, on February 2, 2014, at the request of Zimmer, Anglada invoiced
Cambridge for the entire purchase price of the dryer, and Cambridge subsequently
made payments directly to Anglada. ECF No. 54-6; ECF No. 51-4 ¶ 12.
The dryer was constructed in Spain and shipped directly to Cambridge’s factory
in Canada in May 2014. ECF No. 51-4; ECF No. 7 at 4. After shipment and installation
of the dryer, Cambridge began experiencing “countless problems [with the machinery] .
. . almost from the beginning.” ECF No. 42. After several attempts by Cambridge to
remedy the issues, Cambridge filed suit on October 21, 2014 under the U.S. Arbitration
Act, 9 U.S.C. § 1, naming “Zimmer America Corporation” and “Juame Anglada Versa,
S.A.” as Defendants in the breach of contract action. ECF No. 1 at 2. On November 3,
2014, with consent of the Court, Cambridge filed its first Amended Complaint to correct
the spelling of Anglada’s name from “Juame Anglada Versa, S.A.” to “Juame Anglada
Viñas, S.A.” ECF No. 7. On June 18, 2015, with consent of the Court, Cambridge filed
its second Amended Complaint to assert a cause of action against Anglada under the
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United Nations Convention on Contracts for the International Sale of Goods (“CISG”).
ECF 40.
Shortly thereafter, on August 11, 2015, Cambridge filed a Motion to Compel
Arbitration and Stay Proceedings. ECF No. 42. Zimmer filed a Response to the Motion,
consenting to an Order to compel arbitration. ECF No. 43. On September 9, 2015, the
Court granted Anglada an extension of time to file a Response in Opposition to the
Motion to Compel Arbitration and Stay Proceedings, ECF No. 47, which Anglada filed
on September 11, 2015. ECF No. 50. On September 11, 2015, Anglada also filed a
Motion for Summary Judgment, asking the Court to dismiss all causes of action against
Anglada contained in Cambridge’s Second Amended Complaint on grounds that this
Court lacks personal jurisdiction over Anglada. ECF No. 49. On September 21, 2015,
Cambridge filed a Reply to the Response in Opposition to the Motion to Compel
Arbitration and Stay Proceedings, ECF No. 52, and on September 28, 2015 Cambridge
filed a Response in Opposition to the Motion for Summary Judgment. ECF No. 54.
Similarly, Zimmer filed a Response in Opposition to the Motion for Summary Judgment
on September 28, 2015. ECF No. 56. On October 9, 2015, Anglada filed a Reply to the
Responses in Opposition to its Motion for Summary Judgment. ECF No. 60. For the
reasons discussed herein, Anglada’s Motion for Summary Judgment is GRANTED, and
Cambridge’s Motion to Compel Arbitration and Stay Proceedings is moot as to Anglada,
and GRANTED as to Zimmer.
Standard of Review

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Anglada has moved for summary judgment for lack of personal jurisdiction
pursuant to Federal Rule of Civil Procedure 56. When a defendant challenges the
Court’s personal jurisdiction prior to discovery in a motion to dismiss, the plaintiff is
required only to make a prima facie showing of personal jurisdiction. See Carefirst of
Md., Inc. v. Carefirst Pregnancy Ctrs., Inc., 334 F.2d 390, 396 (4th Cir. 2003). At that
preliminary stage, the plaintiff’s prima facie showing may be established solely by
allegations. Id. However, when a defendant asserts that the court lacks personal
jurisdiction in a summary judgment motion after the close of discovery, as Anglada has
done here, the plaintiff must support its prima facie showing with an averment of facts
that, if credited by the trier, would suffice to establish jurisdiction over the defendant.
Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990), cert.
denied, 493 U.S. 854 (1990). If the defendant asserts in a Rule 56 motion that
undisputed facts show the absence of jurisdiction, the court proceeds, as with any
summary judgment motion, to determine if undisputed facts exist that warrant the relief
sought. Id.

Summary judgment is appropriate when the pleadings, depositions,

affidavits, and discovery on file show there is no genuine issue of material fact such that
the moving party must prevail as a matter of law. Turner v. Millman, 392 S.C. 116, 122,
708 S.E.2d 766, 769 (2011).
Ordinarily, an evidentiary hearing is not required if one is not requested.
Dorchester Fin. Sec., Inc. v. Banco BRJ, S.A., 722 F.3d 81, 86 (2d Cir. 2013) (“[W]e do
not hold that the district court in this case erred in failing to hold an evidentiary hearing,
as there is no indication that either party requested one.”) However, “[i]f the defendant
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contests the plaintiff’s factual allegations, then a hearing is required, at which the
plaintiff must prove the existence of jurisdiction by a preponderance of the evidence.” Id.
at 85 (quoting Ball, 902 F.2d at 197.))1
Discussion
I. Personal Jurisdiction
“[I]n the absence of a federal rule or statute establishing a federal basis for the
assertion of personal jurisdiction, the personal jurisdiction of the district courts is
determined in diversity cases by the law of the forum State.” Ins. Corp. of Ir. v.
Compagnie des Bauxites de Guinee, 456 U.S. 694, 711 (1982) (Powell, J., concurring).
Therefore, in this diversity action, the Court applies South Carolina law in determining
whether it has personal jurisdiction over Anglada. Determining whether a court’s
jurisdiction over a defendant is proper begins by “(1) determining if the state’s long-arm
statute confers jurisdiction and (2) whether the exercise of jurisdiction, if authorized [by
the state’s long-arm statute], is consistent with the Due Process requirements of the
Fourteenth Amendment.” Harris v. Option One Mortg. Corp., 261 F.R.D. 98, 109 (D.S.C.
2009) (citing to Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 59–60 (4th Cir. 1993)).
Because South Carolina’s long-arm statute has been interpreted to extend personal
jurisdiction to the “full reach of Due Process,” courts analyzing personal jurisdiction
under South Carolina law focus their inquiry on whether exercising personal jurisdiction

1

Here, the Movant purports not to contest Plaintiff’s factual allegations and chooses instead to rely on the
insufficiency of the allegations to establish the lack of personal jurisdiction. Accordingly, the Court
declines to hold an evidentiary hearing, and will analyze this Motion based upon the briefs submitted to
the Court.

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is consistent with due process. Id.; see also In re Celotex Corp., 124 F.3d 619, 627–28
(4th Cir. 1997).
As a matter of due process, “[p]ersonal jurisdiction exists where a defendant has
‘minimum contacts’ with the forum ‘such that . . . maintenance of the suit does not
offend traditional notions of fair play and substantial justice.’” Dtex, LLC v. BBVA
Bancomer, S.A., 405 F.Supp.2d 639, 644 (D.S.C. 2005) (quoting Lesnick v.
Hollingsworth & Vose Co., 35 F.3d 939, 942 (4th Cir. 1994) (citing Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1954))). These contacts must sufficiently demonstrate
that the defendant is subject to either specific or general jurisdiction in South Carolina.
Id. at 644; Harris, 261 F.R.D. at 109.
a.

Specific Jurisdiction

After a careful review of the record in this case, the Court finds it does not have
specific personal jurisdiction over Anglada. In determining specific jurisdiction, the court
considers “(1) the extent to which the defendant purposefully avail[ed] itself of the
privilege of conducting activities in the State; (2) whether the plaintiff’s claims arise out
of those activities directed at the State; and (3) whether the exercise of personal
jurisdiction would be constitutionally reasonable.” ALS Scan, Inc. v. Digital Serv.
Consultants, Inc., 29 F.3d 707, 712 (4th Cir. 2002) (internal quotations omitted). Thus,
the “constitutional touchstone” of specific personal jurisdiction “remains that an out-ofstate person has engaged in some activity purposefully directed toward the forum
state.” ESAB Grp., Inc., v. Centricut, Inc., 126 F.3d 617, 625 (4th Cir. 1997) (quoting
Lesnick, 35 F.3d at 945.)) “The contacts related to the cause of action must create a
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‘substantial connection’ with the forum state, . . . [and] the defendant’s actions must be
directed at the forum state in more than a random, fortuitous, or attenuated way.” ESAB
Grp., Inc., 126 F.3d at 625; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462,
475 (1985) (“[A] defendant will not be hailed into a jurisdiction solely as a result of
‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts . . .” (quoting Keeton v. Hustler Magazine,
Inc., 465 U.S. 770, 774 (1984))).
The South Carolina long-arm statute provides in relevant part that:
[A] court may exercise personal jurisdiction over an individual acting directly or
through an agent for causes of action arising from the individual’s: (1) transacting
any business in this State . . . [or] (7) entry into a contract to be performed in
whole or in part within this State.
S.C. Code Ann. § 36-2-803 (Supp. 2008) (emphasis added). Cambridge asserts that
Anglada is subject to specific jurisdiction because “the dryer manufactured by Anglada
was sold to a South Carolina corporation pursuant to an exclusive distribution contract
with a South Carolina corporation.” ECF No. 54 at 8. However, because Cambridge is
not a party to, and therefore, cannot sue under the Anglada-Zimmer contract, and this
suit does not arise out of the Cambridge-Zimmer contract, Cambridge asserts specific
jurisdiction over Anglada arising out of the Cambridge-Zimmer contract under an
agency theory, arguing that “all of the contacts between Zimmer and Cambridge can be
imputed to Zimmer’s principal, Anglada.” ECF No. 54 at 8. Simply put, Cambridge is
asking the Court to impute all of Zimmer’s contacts with South Carolina to Anglada upon
a finding that Anglada is the principal and Zimmer is its agent. Furthermore, Cambridge
argues that there were several communications between Anglada and Zimmer over the
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dryer and its performance while Zimmer was located in South Carolina, as well as a
payment by Zimmer in South Carolina to Anglada to support a finding of specific
personal jurisdiction under the State’s long-arm statute. ECF No. 54 at 8.
i.

Actual Agency

Anglada disputes a finding of specific personal jurisdiction under an agency
theory arising out of the Cambridge-Zimmer contract, asserting that “Zimmer is not . . .
an agent of Anglada,” ECF No. 60 at 5, because Anglada lacks the requisite “right to
control, nor does it control, the conduct of Zimmer.” ECF No. 60 at 5–6. “Agency is the
fiduciary relationship that arises when one person (a ‘principal’) manifests assent to
another person (an ‘agent’) that the agent shall act on the principal’s behalf and subject
to the principal’s control.” Restatement (Third) of Agency § 1.01 (2006). “The test to
determine agency is whether or not the principal has the right to control the conduct of
his alleged agent.” Fernander v. Thigpen, 278 S.C. 140, 144, 293 S.E.2d 424, 426–27
(1982) (emphasis in original), and the Plaintiff has the burden of proving the Defendant
acted as an actual agent. Frasier v. Palmetto Homes of Florence, Inc., 323 S.C. 240,
244, 473 S.E.2d 865, 867 (Ct. App. 1996) (“A party asserting agency as a basis of
liability must prove the existence of the agency, and the agency must be clearly
established by the facts.”)
There is no genuine issue of material fact that an agency relationship does not
exist between Anglada and Zimmer. Cambridge attempts to establish an agency
relationship based on the 2008 exclusive distribution contract between Anglada and
Zimmer that granted Zimmer the right to resell Anglada products in the United States,
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Puerto Rico, and Canada. However, as Anglada points out in its Reply, Anglada does
not exercise, nor have the right to exercise, any control over Zimmer. Importantly,
Zimmer and Anglada are “located in separate countries, divided by an ocean and a
language;” “Anglada [and Zimmer do not] share employees, management, or the same
members of their corporate boards;” “Zimmer . . . has been involved with a grand total
of three sales of Anglada machinery in North America since 2008,” none of which were
sold to South Carolina citizens or entered South Carolina in transit; “Anglada does not
control the daily operations of Zimmer nor does it dictate Zimmer’s marketing or
advertising policies;” and lastly, “Anglada does not control Zimmer’s technical staff or
dictate sales decisions.” ECF No. 60 at 5.
Accordingly, the Court finds that Zimmer is not Anglada’s actual agent and
therefore, is not willing to impute Zimmer’s contacts in South Carolina to Anglada.
ii.

Apparent Agency

Anglada also disputes a finding that Zimmer’s contacts in South Carolina should
be imputed to Anglada under an apparent agency theory. “Under South Carolina law,
[t]he elements which must be proven to establish apparent agency are: (1) that the
purported principal consciously or impliedly represented another to be his agent; (2) that
there was a reliance upon the representation; and (3) that there was a change of
position to the relying party’s detriment.” Froneberger v. Smith, 406 S.C. 37, 47, 748
S.E.2d 625, 630 (Ct. App. 2013) (citing to Graves v. Serbin Farms, Inc., 306 S.C. 60,
63, 409 S.E.2d 769, 771 (1991)). “Apparent authority to do an act is created as to a third
person by written or spoken words or any other conduct of the principal which,
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reasonably interpreted, causes the third person to believe the principal consents to have
the act done on his behalf by the person purporting to act for him.” Id. (citing to Frasier,
473 S.E.2d at 867–68.) “Either the principal must intend to cause the third person to
believe that the agent is authorized to act for him, or he should realize that his conduct
is likely to create such belief.” Frazier, 473 S.E.2d at 868. “Moreover, an agency may
not be established solely by the declarations and conduct of an alleged agent.” Id.
Here, there is no evidence to support a finding of apparent agency because
Anglada did not consciously or impliedly represent to Cambridge that Zimmer was its
agent. First, Cambridge directs the Court to the exclusive distribution contract entered
into by Zimmer and Anglada on December 12, 2008, which guaranteed Zimmer
exclusive rights to sell Anglada’s products in the United State, Puerto Rico and Canada,
set forth a commission table to be paid above net machinery value, and stated that “the
representation of [Anglada’s] machines would be handled by [Zimmer].” See ECF No.
54-3. However, the 2008 distribution contract that states Zimmer is Anglada’s North
American sales agent, was made to Zimmer, not to Cambridge, and there is no
evidence that Cambridge knew of, or relied on, the distribution contract at the time it
purchased the dryer. Moreover, Cambridge concedes that it was aware that Anglada
required Cambridge to enter into a separate contract with Zimmer. Next, Cambridge
directs the Court to an email sent from Roland Zimmer (“Mr. Zimmer”) to Mr. Hamby on
September 17, 2014 stating that Zimmer was the “agent for Anglada in North America.”
ECF No.54-2, Ex. B. However, the representations made by Mr. Zimmer to Mr. Hamby
do not establish an agency relationship because “agency may not be established solely
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by the declarations and conduct of an alleged agent.” Frazier, 473 S.E.2d at 868. Lastly,
Cambridge directs the court to a document prepared by Anglada’s Spanish counsel that
referred to Zimmer as its “representante”. ECF No. 54-2, Ex. C. However, this statement
occurred during litigation, after the purchase of the dryer, and therefore, Cambridge
cannot prove that it relied on the statement to its detriment.
After carefully reviewing the record, the Court does not find that Cambridge
submitted sufficient evidence to create a genuine issue of material fact as to whether
Anglada represented to it that Zimmer had apparent authority to act as its agent. In the
absence of an agency relationship between Anglada and Zimmer, Cambridge is unable
to establish specific personal jurisdiction. Accordingly, this Court finds it cannot assert
specific personal jurisdiction over Anglada because Anglada does not have the
necessary minimum contacts to establish that it purposefully availed itself of the
privileges of conducting activities in this State.
b.

General Jurisdiction

The Court also concludes it does not have general personal jurisdiction over
Anglada. If the defendant’s contacts with the forum are not the basis of the suit, general
jurisdiction may “arise from the defendant’s general, more persistent, but unrelated
contacts with the State.” ALS Scan, Inc., 293 F.3d at 712. A court has general
jurisdiction if the defendant has an “enduring relationship” with the forum state, even if
the contacts are not directly related to the cause of action. See Cockrell v. Hillerich &
Bradsby Co., 363 S.C. 485, 495, 611 S.E.2d 505, 510 (2005). To satisfy the enduring
relationship requirement of general jurisdiction, “the non-resident defendant’s contacts
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must be so continuous and systematic as well as so substantial and of such a nature as
to justify suit against the defendant on causes of action arising from dealings entirely
different from those activities.” Id. (citing Int’l Shoe Co. v. Washington, 326 U.S. 310,
318 (1945)); Coggeshall v. Reprod. Endocrine Assoc. of Charlotte, 376 S.C. 12, 17, 655
S.E.2d 476, 478–79 (2006) (“An enduring relationship is indicated by contacts that are
substantial, continuous, and systematic.”). Furthermore, the defendant’s contacts with
the forum must satisfy the Due Process Clause. Cribb, 328 S.E.2d at 718 (citing to
Coggeshell, 655 S.E.2d at 478.) Thus, Cambridge’s assertion of general jurisdiction
hinges on whether Anglada has “affiliations with [South Carolina] that are so ‘continuous
and systematic’ as to render them essentially at home in [South Carolina].” Goodyear
Dunlop Tires Operations, S.A. v. Brown, 131 S.Ct. 2846, 2851 (2011).
Cambridge asserts that Anglada is subject to general jurisdiction in South
Carolina because Anglada has had a business relationship with Zimmer since 2008,
ECF No. 54 at 7, and thus, there is an “enduring relationship” between Anglada and
South Carolina to support a finding of general personal jurisdiction. ECF No. 54 at 7–
8.The distribution agreement reached between Zimmer and Anglada on October 12,
2008, started the parties business relationship and guaranteed Zimmer exclusive rights
to sell Anglada’s products in the United State, Puerto Rico and Canada, set forth a
commission table to be paid above net machinery value, and stated that “the
representation of [Anglada’s] machines would be handled by [Zimmer].” See ECF No.
54-3. However, this agreement alone is insufficient to support a finding that Anglada has
an “enduring relationship” with South Carolina and is “essentially at home” as
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contemplated in Goodyear because there are no other facts to support a substantial or
continuous relationship. Rather, the facts presented indicate Anglada’s relationship with
South Carolina is attenuated at best. Importantly, pursuant to the distribution
agreement, Zimmer has sold only three of Anglada’s products since 2008, none of
which were sold to South Carolina citizens or entered South Carolina. Moreover,
Anglada does not do business in the State of South Carolina, “[does not] own property
[there], [does not] have offices or employees located [there];” “has never made a direct
sale to an end customer in South Carolina;” “is not registered to do business in the
State of South Carolina nor does it have a registered agent in South Carolina;” and
lastly, Anglada “does not engage in any marketing initiatives or sales efforts in South
Carolina, or aimed at anyone located in the State.” ECF No. 60 at 3; see also ECF Nos.
49-1 & 51, Ex. 4. Accordingly, the Court declines to assert general personal jurisdiction
over Anglada.
For the reasons discussed herein, the Court finds that it has neither specific nor
general personal jurisdiction over Anglada, and therefore, Anglada’s Motion for
Summary Judgment is GRANTED.
II. Motion to Compel Arbitration
Upon a finding that this Court lacks personal jurisdiction over Anglada, this Court
also lacks the authority to compel Anglada to arbitrate this dispute in South Carolina.
Accordingly, Cambridge’s Motion to Compel Arbitration and Stay Proceedings is moot
as it applies to Anglada. However, Zimmer filed a Response consenting to the Motion to
Compel Arbitration and Stay Proceedings on August 19, 2015. ECF No. 43.
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Accordingly, this Court GRANTS Cambridge’s Motion to Compel Arbitration and Stay
Proceedings as it applies to Zimmer. Cambridge and Zimmer shall arbitrate this dispute
in Spartanburg, South Carolina as set forth in Paragraph 8.1 of the Zimmer-Cambridge
contract.
IT IS THEREFORE ORDERED that Anglada’s Motion for Summary Judgment
for Lack of Personal Jurisdiction is GRANTED, and Cambridge’s Motion to Compel
Arbitration and Stay Proceedings is moot as to Anglada and GRANTED as to Zimmer
as set forth in this Order.

IT IS SO ORDERED.

November 9, 2015
Anderson, South Carolina

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