Key Tronic Corporation v. Smart Technologies ULC et al
Filing
128
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION. Defendants Motion to Dismiss ECF No. 90 is GRANTED. Plaintiffs Request for Jurisdictional Discovery ECF No. 108 is DENIED. Signed by Chief Judge Thomas O. Rice. (LLH, Courtroom Deputy)
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
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KEY TRONIC CORPORATION, a
Washington corporation,
No. 2:16-CV-0028-TOR
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Plaintiff,
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v.
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ORDER GRANTING DEFENDANT
STEEL TECHNOLOGIES’ MOTION
TO DISMISS FOR LACK OF
PERSONAL JURISDICTION
SMART TECHNOLOGIES ULC, a
Canadian corporation; et al.,
Defendants.
BEFORE THE COURT is Defendant Steel Technologies de Mexico, S.A.,
de C.V.’s Motion to Dismiss (ECF No. 90). This matter was submitted for
consideration without oral argument. The Court has reviewed the completed
briefing and record and files herein, and is fully informed.
BACKGROUND
Plaintiff Key Tronic Corporation (“Key Tronic”) filed the instant action on
February 1, 2016. ECF No. 1. In its Third Amended Complaint (ECF No. 54) Key
Tronic asserts several causes of action against Defendant Steel Technologies de
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
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Mexico, S.A. de C.V. (“Steel Tech Mexico”), arising out of a contractual dispute
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related to the supply of components to be used in the manufacture of electronic
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white boards. ECF No. 54 at ¶¶ 138-185. Steel Tech Mexico now moves the
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Court to dismiss the claims against it for lack of (1) personal jurisdiction and (2)
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service. ECF No. 90. Key Tronic requests the Court deny the motion or, in the
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alternative, allow for jurisdictional discovery. ECF NO. 105 at 29. For the reasons
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discussed below, the Court GRANTS Defendant Steel Tech Mexico’s Motion to
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Dismiss (ECF No. 90) for lack of personal jurisdiction and DENIES Plaintiff’s
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request for jurisdictional discovery.
FACTS 1
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Steel Tech Mexico
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Steel Tech Mexico is a steel processing company with its principal place of
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business in Juarez, Mexico. ECF No. 90 at 4. The company was first formed and
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incorporated in Mexico in 1987 and has continued to operate its steel processing
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disputes are settled in favor of Plaintiff and uncontroverted allegations in the
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complaint are taken as true; but bare allegations are not accepted as true where the
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pleading is contradicted by affidavit. See Mavrix Photo, Inc. v. Brand
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Technologies, Inc., 647 F.3d 1218, 1223 (9th Cir. 2011).
The facts are construed in a light most favorable to Plaintiff, as factual
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wholly within the borders of Mexico. Id. Steel Tech Mexico is a Mexico
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corporation based in Mexico with no offices or operations in the United States.
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ECF No. 90 at 3. Steel Tech Mexico does not own any real property in
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Washington or the United States, it does not employ any individuals in Washington
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or the United States, it does not pay Washington or United States income taxes,
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and it is not registered to do business in either Washington or any other state in the
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United States. ECF No. 90 at 4.
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Key Tronic – Steel Tech Mexico Initial Meeting
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Key Tronic has operations in both the United States and Mexico. Its Mexico
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operations are managed by its subsidiary, Key Tronic Juarez S.A. de C.V. (“Key
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Tronic Mexico”).2 ECF No. 90 at 5. The relationship between Key Tronic Mexico
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and Steel Tech Mexico arose in 2013 after Key Tronic, the parent corporation,
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purchased a manufacturing facility located in Juarez, Mexico from a company
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called Sabre Manufacturing S. de R.L. de C.V. (“Sabre”). Steel Tech Mexico had
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a prior business relationship with Sabre, and through this connection Steel Tech
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Tronic Mexico, the subsidiary, the order does not distinguish between the two
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beyond this sub-section because the parties did not make the distinction clear; and,
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in any event, the distinction does not materially affect the remaining analysis.
Although Key Tronic, the parent corporation, is distinguished from Key
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
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Mexico and Key Tronic Mexico entered into business relations. 3 ECF No. 90 at 5.
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Before entering into negotiations, both parties entered into a non-disclosure
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agreement (“NDA”) that included a Washington choice of law provision. ECF No.
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105 at 5-6 (the NDA was to be “construed and interpreted in accordance with the
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laws of the State of Washington without regard to its choice of law rules.”)
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Purchase Orders Underlying the Dispute
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In the fall of 2013, Key Tronic sent an email to Steel Tech Mexico’s office
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in Mexico requesting a quote for a new project involving electronic whiteboards
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for one of Key Tronic’s customers (the “SMART Project”). ECF No. 90 at 5.
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Steel Tech Mexico responded and transmitted a quote via email back to Key
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Tronic. Id. Key Tronic issued its first purchase order to Steel Tech Mexico for the
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SMART project on December 18, 2013. ECF No. 91-3 at 2. In February of 2014,
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Key Tronic submitted additional purchase orders to Steel Tech Mexico via email,
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pursued the relationship, but this is irrelevant as both parties agree the relationship
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first arose as a result of Steel Tech Mexico’s prior relationship with Sabre
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combined with Key Tronic’s acquisition of the Sabre manufacturing plant in
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Mexico. See ECF Nos. 105 at 5; 118 at 4. As such, this is not a contact with
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Washington, regardless of who reached out first.
The parties dispute whether Steel Tech Mexico or Key Tronic initially
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which Steel Tech Mexico accepted and began performing in Mexico. ECF No. 90
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at 6. From February 2014 until the time Steel Tech Mexico and Key Tronic parted
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ways in the middle of 2015, Steel Tech Mexico continued to process the steel
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needed for the SMART Project exclusively in Mexico. Id.
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Between July 25, 2013 and July 21, 2015 Key Tronic and Steel Tech issued
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at least one hundred and twelve (112) purchase orders, each prepared and sent
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from Key Tronic’s Spokane Valley, Washington offices to representatives at Steel
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Tech Mexico’s Juarez facilities. ECF No. 105 at 6. Steel Tech would accept and
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confirm receipt of each purchase order by sending an email back to Spokane
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Valley, Washington. ECF No. 105 at 6. Steel Tech would then send invoices to
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the specified address in Washington. ECF No. 105 at 7. The purchase orders
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included an indemnification provision whereby Steel Tech Mexico was required to
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indemnify the Buyer, who was listed as “Barbara S. Kowalski.” See, e.g., ECF No.
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91-3. The purchase order designated that the product was to be shipped to
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“Keytronic Juarez S.A. DE CV” in Juarez, Mexico. See, e.g., id.; ECF No. 90 at 6.
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Steel Tech Mexico made all such deliveries to this facility in Mexico, and never
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sent any steel to Key Tronic in Washington. ECF 90 at 6.
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Communication between Key Tronic and Steel Tech Mexico
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Throughout the duration of the SMART Project, Steel Tech Mexico and Key
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Tronic met in Juarez, Mexico at Steel Tech Mexico’s facility for no less than forty
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
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meetings, where the parties discussed various aspects of the SMART Project. Id.
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at 7. During this time, Key Tronic and Steel Tech executed over 100 contracts (all
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of which were drafted and prepared in Washington State and accepted by return
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communication to Washington State) requiring Steel Tech to provide the steel for
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Key Tronic’s manufacture of interactive whiteboard products. ECF No. 105 at 2.
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In furtherance of these contracts, Steel Tech sent over 560 communications to Key
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Tronic in Washington State—both from its corporate headquarters located in
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Louisville, Kentucky and its manufacturing facilities in Juarez, Mexico. ECF No.
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105 at 8.
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Performance
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According to Steel Tech, “Steel Tech Mexico negotiated its agreement with
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Key Tronic in Mexico, performed under its agreement in Mexico, and delivered its
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goods to a Mexico facility owned by Key Tronic.” ECF No. 90 at 3; ECF No. 108
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at 28 (Key Tronic purchase order showing “Ship To” address is “Keytronic Juarez
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S.A. DE CV”). Key Tronic does not dispute this claim, see generally ECF No.
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105, and the purchase orders support the assertion that Steel Tech Mexico
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produced and delivered the products entirely in Mexico to a facility in Mexico.
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See ECF No. 108 at 28. However, according to Key Tronic, the “supply
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relationship [between Key Tronic and Steel Tech Mexico] was solely managed
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by—and all of Steel Tech’s correspondence was directed to—Key Tronic’s
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
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corporate offices in Spokane Valley, Washington.” ECF No. 105 at 6.
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Unfortunately, issues arose with the first and subsequent purchase orders regarding
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the quality of the products being delivered, which is the subject matter of the
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present suit. See ECF No. 105 at 8.
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Events after Dispute
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After issues between Key Tronic and Steel Tech Mexico arose, the parties
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agreed to meet to discuss some of the issues. ECF No. 90 at 7. On two occasions
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Steel Tech Mexico sent representatives to Spokane Washington to meet with Key
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Tronic representatives. ECF No. 105 at 16. Importantly, according to Key Tronic,
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Steel Tech Mexico’s “breaches of purchase orders necessitated [the meetings] in
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Washington to resolve supply issues.” ECF No. 105 at 8 (capitalization altered).
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DISCUSSION
A. Personal Jurisdiction
Personal jurisdiction is the power of the Court over the person. S.E.C. v.
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Ross, 504 F.3d 1130, 1138 (9th Cir. 2007) (“In personam jurisdiction, simply
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stated, is the power of a court to enter judgment against a person.”). When
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opposing a motion to dismiss for lack of personal jurisdiction under Federal Rule
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of Civil Procedure 12(b)(2), “the plaintiff bears the burden of establishing that
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jurisdiction is proper.” Mavrix, 647 F.3d at 1223 (citation omitted).
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Determination of jurisdiction is reviewed de novo. Harris Rutsky & Co. Ins. Servs.
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v. Bell & Clements Ltd., 328 F.3d 1122, 1128 (9th Cir. 2003).
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Where “the defendant’s motion is based on written materials rather than an
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evidentiary hearing, the plaintiff need only make a prima facie showing of
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jurisdictional facts to withstand the motion to dismiss.” Mavrix, 647 F.3d at 1223
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(citation omitted). Under this standard, plaintiff’s “materials [must] demonstrate
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facts which support a finding of jurisdiction in order to avoid a motion to dismiss.”
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Data Disc, Inc. v. Systems Technology Associates, Inc., 557 F.2d 1280, 1285 (9th
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Cir. 1977) (citing U. S. Ry. Equip. Co. v. Port Huron & Detroit R.R. Co., 495 F.2d
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1127, 1128 (7th Cir. 1974); and O’Hare Int’l Bank v. Hampton, 437 F.2d 1173,
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1176 (7th Cir. 1971)). The plaintiff cannot “simply rest on the bare allegations of
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its complaint,” but uncontroverted allegations in the complaint must be taken as
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true. Mavrix, 647 F.3d at 1223 (citation omitted). The courts “may not assume the
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truth of allegations in a pleading which are contradicted by affidavit[,]” Data Disc,
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557 F.2d at 1284, but factual disputes are resolved in the plaintiff’s favor, Pebble
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Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Mavrix, 647 F.3d at
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1223.
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Personal jurisdiction in federal courts is determined by the law of the State
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in which it sits. Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015).
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Washington state law permits personal jurisdiction over defendants to the full
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extent permitted by the Due Process Clause of the United States Constitution.
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Shute v. Carnival Cruise Lines, 113 Wash.2d 763, 766-67 (1989). Under the Due
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Process Clause, a court may exercise personal jurisdiction over a defendant only
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where “the defendant [has] certain minimum contacts with the forum state such
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that the maintenance of the suit does not offend traditional notions of fair play and
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substantial justice.” Picot v. Weston, 780 F.3d 1206, 1211 (9th Cir. 2015) (quoting
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Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)) (internal quotation marks
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and brackets omitted).
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There are two types of personal jurisdiction: general and specific. General
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jurisdiction requires connections with the forum “so continuous and systematic as
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to render the foreign corporation essentially at home in the forum State[.]” Ranza,
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793 F.3d at 1069.4 Specific jurisdiction, in contrast, will lie “when a case arises
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out of or relates to the defendant’s contacts with the forum.” Id. at 1068 (internal
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quotation marks and brackets omitted) (quoting Helicopteros Nacionales de
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Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984)).
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The Ninth Circuit uses the following three-part test when determining if
specific personal jurisdiction exists:
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(1) The non-resident defendant must . . . perform some act by which he
purposefully avails himself of the privilege of conducting activities in the
forum, thereby invoking the benefits and protections of its laws;
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General jurisdiction is not at issue. See ECF No. 105 at 13.
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(2) the claim must be one which arises out of or relates to the defendant’s
forum-related activities; and
(3) the exercise of jurisdiction must comport with fair play and substantial
justice, i.e. it must be reasonable.
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Mavrix, 647 F.3d at 1227-28 (emphasis in original). The plaintiff has the burden
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of proving the first two prongs. CollegeSource, Inc. v. AcademyOne, Inc., 653
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F.3d 1066, 1076 (9th Cir. 2011). Once established, the burden shifts to the
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defendant to “set forth a ‘compelling case’ that the exercise of jurisdiction would
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not be reasonable.” Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462,
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477 (1985)); Picot, 780 F.3d at 1211–12. As discussed below, Key Tronic has not
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met its burden in establishing the first prong: purposeful availment.
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Purposeful Availment
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As the Supreme Court emphasized in Hanson v. Denckla, “it is essential in
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each case that there be some act by which the defendant purposefully avails itself
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of the privilege of conducting activities within the forum State, thus invoking the
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benefits and protections of its laws.” 357 U.S. 235, 253 (1958) (emphasis added).
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The rationale is that a party who “purposely avails itself of the privilege of
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conducting activities within the forum state” must also “submit to the burdens of
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litigation in that forum as well.” Hanson, 357 U.S. at 253; Burger King, 471 U.S.
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at 476. Where “the defendant deliberately has engaged in significant activities
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within a State . . . or has created continuing obligations between himself and
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residents of the forum . . . he manifestly has availed himself of the privilege of
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conducting business there.” Burger King, 471 U.S. at 476 (emphasis added).
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The jurisdictional “inquiry is limited to examining contacts that proximately
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result from actions by the defendant himself.” Burger King, 471 U.S. at 475-76
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(emphasis original). This is because:
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Purposeful availment analysis examines whether the defendant’s contacts
with the forum are attributable to his own actions or are solely the actions of
the plaintiff. In order to have purposefully availed oneself of conducting
activities in the forum, the defendant must have performed some type of
affirmative conduct which allows or promotes the transaction of business
within the forum state.
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Roth v. Garcia Marquez, 942 F.2d 617, 621 (9th Cir. 1991) (citation omitted). In
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other words, the defendant’s relationship with the state must be analyzed with
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regard to the defendant’s deliberate, purposeful, and affirmative contacts with the
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forum itself, not with persons residing there. Walden v. Fiore, 134 S.Ct. 1115,
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1118 (2014) (citing Int’l Shoe, 326 U.S. at 319). Stated plainly, “[t]he plaintiff
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cannot be the only link between the defendant and the forum.” Id. This limit on
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the Court’s jurisdiction “ensures that a defendant will not be haled into a
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jurisdiction solely as a result of random, fortuitous, or attenuated contacts . . . or of
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the unilateral activity of another party or a third person.” Burger King, 471 U.S. at
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475 (internal citations and quotation marks omitted); Picot, 780 F.3d at 1212
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(contacts that are merely “random, fortuitous, or attenuated” are not sufficient for
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establishing jurisdiction).
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The inquiry is further limited to examining contacts that occurred prior to
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the event causing the litigation. Steel v. United States, 813 F.2d 1545, 1549 (9th
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Cir. 1987); Farmers Ins. Exchange v. Portage La Prairie Mut. Ins. Co., 907 F.2d
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911, 913 (9th Cir. 1990). This is because the Due Process Clause “requires that
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individuals have fair warning that a particular activity may subject them to the
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jurisdiction of a foreign sovereign,” and this “fair warning” must arise “when the
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events that gave rise to the suit occurred.” Steel, 813 F.2d at 1549 (internal
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quotation marks and brackets omitted) (quoting Burger King, 471 U.S. at 472
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(quoting Shaffer v. Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring))).
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For claims sounding in contract, the “purposeful availment” analysis asks
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whether a defendant has “purposefully availed himself of the privilege of
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conducting activities within the forum State, thus invoking the benefits and
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protections of its laws.” Picot, 780 F.3d at 1212 (internal citations and brackets
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omitted); Hanson, 357 U.S. at 253; see, e.g., World–Wide Volkswagen Corp. v.
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Woodson, 444 U.S. 286, 295 (1980) (finding no personal jurisdiction in Oklahoma
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where defendants “avail[ed] themselves of none of the privileges and benefits of
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Oklahoma law”). “When a [business from one state] seeks out purchasers in other
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states . . . and deals with them by out-of-state agents or by interstate mail and
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telephone, [that business] is not entitled to force the customer to come to [its home
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state] to defend an action on the contract.” Roth, 942 F.2d at 621–22 (original
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brackets omitted) (quoting Thos. P. Gonzalez Corp. v. Consejo Nacional de
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Produccion de Costa Rica, 614 F.2d 1247, 1252 (9th Cir. 1980) (quoting Interdyne
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Co. v. SYS Computer Corp., 31 Cal.App.3d 508, 510, 107 Cal.Rptr. 499 (1973))).
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A mere contractual relationship “with an out-of-state party alone [cannot]
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automatically establish sufficient minimum contacts in the other party’s home
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forum[.]” Burger King, 471 U.S. at 478 (emphasis in original); Picot, 780 F.3d at
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1212. Moreover, “the fact that a contract envisions one party discharging his
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obligations in the forum state cannot, standing alone, justify the exercise of
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jurisdiction over another party to the contract.” Picot, 780 F.3d at 1212–13.
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Rather, the defendant must have “performed some type of affirmative conduct
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which allows or promotes the transaction of business within the forum state.” Sher
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v. Johnson, 911 F.2d 1357, 1362 (9th Cir. 1990) (quoting Sinatra v. Nat’l
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Enquirer, Inc., 854 F.2d 1191, 1195 (9th Cir. 1988)). “A showing that a defendant
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purposefully availed himself of the privilege of doing business in a forum state
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typically consists of evidence of the defendant’s actions in the forum, such as
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executing or performing a contract there.” Schwarzenegger v. Fred Martin Motor
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Co., 374 F.3d 797, 802 (9th Cir. 2004) (citing Hanson, 357 U.S. at 253).
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Importantly, personal jurisdiction does not turn on “mechanical tests” or on
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“conceptualistic . . . theories of the place of contracting or of performance.”
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Burger King, 471 U.S. at 478 (citing Int’l Shoe, 326 U.S. at 319; and Hoopeston
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Canning Co. v. Cullen, 318 U.S. 313, 316 (1943)). Rather, the court must follow a
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“highly realistic” approach that recognizes that a “contract” is “ordinarily but an
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intermediate step serving to tie up prior business negotiations with future
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consequences which themselves are the real object of the business transaction.” Id.
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at 479 (citation omitted). As a consequence “prior negotiations and contemplated
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future consequences, along with the terms of the contract and the parties’ actual
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course of dealing . . . must be evaluated in determining whether the defendant
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purposefully established minimum contacts within the forum.” Id.
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Moreover, “a defendant’s transitory presence will support jurisdiction only if
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it was meaningful enough to ‘create a substantial connection with the forum
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State.’” Picot, 780 F.3d at 1213 (quoting Burger King, 471 U.S. at 475).
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However, for jurisdiction to attach, Defendants need not have “physically enter[ed]
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the forum state.” Burger King, 471 U.S. at 476 (emphasis original). It is enough if
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the nonresident defendant intentionally transacted business in the forum state for a
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court to find sufficient minimum contacts to subject it to personal jurisdiction.
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Logan Productions, Inc. v. Optibase, Inc., 103 F.3d 49, 53 (7th Cir. 1996); see
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Burger King, 471 U.S. at 476 (In modern commercial life, “it is an inescapable fact
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. . . that a substantial amount of commercial business is transacted solely by mail
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and wire communications across state lines, thus obviating the need for physical
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presence[.]”). Which party initiated contact is not determinative of personal
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jurisdiction, but determining who “started it” is just “one helpful factor in the
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jurisdictional equation.” Logan, 103 F.3d at 53 (citation omitted).
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Here, there is nothing—or at the most very little—to suggest Steel Tech
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Mexico availed itself of the protections and benefits of the laws of Washington, as
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there appears to be no deliberate conduct on the part of Steel Tech Mexico to
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associate itself with Washington. In opposing Steel Tech Mexico’s Motion to
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Dismiss (ECF No. 90), Key Tronic points to several “contacts” to establish
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purposeful availment. See ECF No. 105 at 14-18.
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Notably, some of the “contacts” on which Key Tronic relies are not
13
appropriate for this analysis, or at the most do little to establish sufficient contacts
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between Steel Tech Mexico and Washington. First, although the parties entered
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into a NDA governed by Washington law, this “contact” is not germane to any
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dispute at issue, and is thus not relevant for purposes of specific personal
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jurisdiction. Ranza, 793 F.3d at 1068 (case must “arise out of or relate to”
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contacts). Even if relevant, this “contact” with Washington is minimal and merely
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incidental to the overall goal of the parties in establishing a supply relationship.
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Moreover, the purchase orders did not designate Washington law as the choice of
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law, and that is the crux of the dispute, not the NDA. As such, this is distinct from
2
Burger King, where the contract underlying the suit contained the relevant choice
3
of law provision, required a twenty-year term relationship, and also provided “that
4
the franchise relationship is established in [Florida].” 471 U.S. at 465-66. Second,
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Steel Tech Mexico’s two visits to Washington—the only physical presence in
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Washington alleged—occurred after the dispute at hand arose (i.e. breach of
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contract and warranty), and is thus not a contact for purposes of personal
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jurisdiction. Steel, 813 F.2d at 1549; ECF No. 105 at 8 (Key Tronic conceding that
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Steel Tech Mexico’s “breaches of purchase order necessitated a meeting in
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Washington to resolve supply issues.”) (capitalization altered).
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Beside these, Key Tronic alleges little more than (1) e-mail communication
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between Steel Tech Mexico and Key Tronic employees in Washington, (2)
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purchase orders being drafted in Washington and sent to Mexico, and (3) Steel
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Tech Mexico’s sending invoices to Washington.5 However, these so-called
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steel products, but Key Tronic does not present this as a contact to be considered
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for personal jurisdiction. See ECF No. 105 at 14-18; www.steeltechnologies.com.
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While the existence of a website can be a relevant contact for purposes of
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jurisdiction, because the website at issue is merely passive and informational—as
Steel Tech Mexico also has a website displaying its capabilities in producing
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“contacts” with Washington resulted from Key Tronic’s choices and conduct—
2
namely, administering the sales and billing of Key Tronic Mexico in
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Washington—rather than a deliberate choice on the part of Steel Tech Mexico.
4
Burger King, 471 U.S. at 475 (defendant must “deliberately” engage in conduct).
5
As a result, any contacts between Steel Tech Mexico and the state of Washington
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were merely “random, fortuitous, [and] attenuated” and arose only because of Key
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Tronic’s “unilateral activity” in choosing to administer the billing and sales from
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Washington, rather than Mexico, where the product is delivered. Burger King, 471
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U.S. at 475 (internal citations and quotation marks omitted). Moreover, ordinarily
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“use of the mails, telephone, or other international communications simply do not
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compared to interactive—this potential “contact” carries little, if any, weight, as
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the website is not “aimed” at Washington. See Pebble Beach, 453 F.3d at 1156.
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After all, the website does not directly sell any products, although potential
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customers can submit a request for a quote for products. Id. Moreover, there is no
17
allegation that the dispute has anything to do with the website, so this is not
18
relevant for purposes of specific personal jurisdiction. Ranza, 793 F.3d at 1068
19
(the case must “arise[] out of or relate[] to the defendant’s contacts with the
20
forum.”).
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qualify as purposeful activity invoking the benefits and protection of the forum
2
state.” Roth, 942 F.2d at 622 (brackets and citation omitted).
3
Finally, Key Tronic points to the terms of the purchase orders—specifically
4
the requirement that Steel Tech Mexico must indemnify the “buyer.” ECF No. 105
5
at 17. Although Key Tronic takes the next step and claims Steel Tech Mexico
6
“agreed to indemnify a Washington corporation,” this is not necessarily the case.
7
The “buyer” on the purchase order is listed as “Barbara S. Kowalski.”
8
Presumably, Ms. Kowalski is acting in her representative capacity for Key Tronic,
9
but it is unclear whether she is acting on behalf of the parent or subsidiary
10
company. Either way, this supposed “contact” is not a result of any intended act
11
on Steel Tech Mexico’s part, and this contact with Washington is merely incidental
12
to the overall relationship, at best. After all, the initial interest between the parties
13
revolved around the purchase of a manufacturing plant in Mexico, and only later
14
did Key Tronic send a purchase order in which it chose who to designate as the
15
buyer.
16
These “contacts” are similar to that in Picot to the extent both “grew
17
incidentally out of broader efforts” to perform under the respective agreements.
18
780 F.3d at 1213. However, the “contacts” alleged here do not even rise to the
19
level found in Picot, as Steel Tech Mexico’s travel to Mexico is not a “contact” to
20
be considered, in contrast to Picot, and all performance was undertaken in Mexico.
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION ~ 18
1
Id.; see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 816 (9th Cir. 1988)
2
(finding no purposeful availment, despite the contract being signed in the forum
3
state, because (1) the contract was negotiated—i.e. the substance of the
4
relationship was formed—outside the forum state, (2) the contract made no
5
reference to the forum state, (3) no agents of the defendant performed or executed
6
any portion of the contract in the forum state, and (4) the defendants visit to the
7
forum state was only a result of plaintiff’s invitation). On the other hand, the facts
8
presented are distinct from Roth in that most of the performance—if not all—takes
9
place in Mexico rather than Washington. 942 F.2d at 622 (“the future
10
consequences” of the contract heavily impacted the forum state where “most of the
11
work . . . would have been performed.”).
12
Importantly, Mexico was the gravitas of nearly every aspect of Steel Tech
13
Mexico’s involvement with Key Tronic. Steel Tech Mexico and Key Tronic first
14
became acquainted with each other as a result of Key Tronic purchasing a
15
manufacturing facility located in Mexico from a company whom Steel Tech
16
Mexico had previous business relations. ECF No 105 at 5. Before any purchase
17
orders were filled, Key Tronic inspected Steel Tech Mexico’s facility located in
18
Mexico. ECF No. 105 at 5. Further, numerous meetings between the companies
19
were held in Mexico (over forty, although some are not relevant because they took
20
place after the dispute arose), and the only two visits to Washington by Steel Tech
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION ~ 19
1
Mexico occurred after the present dispute arose, and is thus not appropriate for
2
consideration. Steel, 813 F.2d at 1549; ECF Nos. 90 at 7, 105 at 8. Moreover, all
3
purchase orders were filled by Steel Tech Mexico delivering the product to Key
4
Tronic Mexico’s facility in Juarez. See, e.g., ECF No. 91-3. As such, at no point
5
did Steel Tech Mexico deliver any product to Key Tronic in Washington. ECF No.
6
118 at 11. Finally, Steel Tech Mexico’s alleged breach occurred entirely in
7
Mexico, where it allegedly failed to produce the relevant products to Key Tronic’s
8
standards. Id. As a result, the future consequences of the contract were entirely in
9
Mexico—i.e. the “real object” of the agreement was production and delivery of
10
products in Mexico. Burger King, 471 U.S. at 478. Under these facts, the contract
11
does not have “a substantial connection with that State.” Id. at 479 (emphasis
12
original) (citing Mcgee v. Int’l Life Ins. Co., 355 U.S. 220, 223 (1957)).
13
The reality of the relationship shows Steel Tech Mexico wanted to continue
14
the business it had with Sabre before Key Tronic purchased the Sabre
15
manufacturing facility. This facility was in Mexico. Steel Tech Mexico did not
16
reach out to Key Tronic before it bought the Mexico facility. Steel Tech Mexico’s
17
connections to Washington are tenuous at best, as all communications to which
18
Key Tronic points that relate to Washington were administrative in nature, whereas
19
the initial interaction, inspection, performance, delivery, and alleged breach all
20
arose in Mexico.
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION ~ 20
1
Key Tronic’s position would allow a company to delegate its administrative
2
functions to a subsidiary or parent located in a state of its choice and thereby
3
manufacture personal jurisdiction over its business parties. This is akin to creating
4
personal jurisdiction by looking to the Plaintiff’s activities, and would mistakenly
5
allow the “plaintiff’s contacts with the defendant and forum to drive the
6
jurisdictional analysis.” Walden, 134 S.Ct. at 1125; Picot, 780 F.3d at 1213. This
7
is the exact concern warned of in Roth:
8
When a [business from one state] seeks out purchasers in other states . . . and
deals with them by out-of-state agents or by interstate mail and telephone,
[that business] is not entitled to force the customer to come to [its home
state] to defend an action on the contract.
9
10
11
Roth, 942 F.2d at 621–22 (citations and original brackets omitted).
12
In sum, Steel Tech Mexico has not purposefully availed itself of the laws
13
and protections of the State of Washington, as Steel Tech Mexico’s conduct was
14
not directed toward Washington and the only contacts with Washington was a
15
result of Key Tronic’s choice to delegate the administrative functions to its office
16
in Washington. Steel Tech Mexico’s connection with Washington, at most, was
17
merely incidental to its interest in producing and delivering steel in Mexico. The
18
remaining issues regarding jurisdiction are moot, as Key Tronic has failed to
19
establish the first prong required for personal jurisdiction.
20
//
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION ~ 21
1
2
B. Jurisdictional Discovery
Plaintiff Key Tronic requests, in the alternative to denying the motion to
3
dismiss, the opportunity to perform jurisdictional discovery concerning Steel Tech
4
Mexico’s contacts with Washington State. ECF No. 105 at 29.
5
Jurisdictional discovery is not explicitly discussed in the Federal Rules of
6
Civil Procedure, but is rather a judicial creation based on the broad principles of
7
discovery and the courts’ inherent power to establish their own jurisdiction. S.I.
8
Strong, Jurisdictional Discovery in United States Federal Courts, 67 Wash. & Lee
9
L. Rev. 489, 497 (2010) (citing Gen. Indus. Co. v. Birmingham Sound
10
Reproducers, Ltd., 26 F.R.D. 559, 561 (E.D.N.Y. 1961) (announcing that the court
11
has jurisdiction to determine its own jurisdiction)). “If the pleadings and other
12
submitted materials raise issues of credibility or disputed questions of fact with
13
regard to jurisdiction, the district court has the discretion to take evidence at a
14
preliminary hearing in order to resolve the contested issues.” Data Disc, 557 F.2d
15
at 1285 (citing 5 C. Wright & A. Miller, Federal Practice and Procedure s 1373, at
16
pp. 714-15 (1969); and 4 J. Moore, Federal Practice s 26.56(6), at p. 26-190
17
(1976)). In other words, “[d]iscovery may be appropriately granted where
18
pertinent facts bearing on the question of jurisdiction are controverted or where a
19
more satisfactory showing of the facts is necessary.” Boschetto v. Hansing, 539
20
F.3d 1011, 1020 (9th Cir. 2008) (citing Data Disc, 557 F.2d at 1285 n.1 (citing
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION ~ 22
1
Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 430 n.24 (9th Cir.
2
1977))). “Because jurisdictional discovery takes place prior to a determination that
3
the court actually has jurisdiction over this dispute and this defendant, it is
4
particularly important to avoid imposing undue burdens on a party who may not
5
even be subject to the court’s power.” 67 Wash. & Lee L. Rev. at 492.
6
A grant or denial of jurisdictional discovery is reviewed for abuse of
7
discretion. Harris Rutsky, 328 F.3d at 1135. The district court’s refusal to provide
8
such discovery, “will not be reversed except upon the clearest showing that denial
9
of discovery results in actual and substantial prejudice to the complaining litigant.”
10
Boschetto, 539 F.3d at 1020. Courts do not abuse their discretion in denying a
11
request for jurisdictional discovery where neither the complaint nor any supporting
12
affidavit allege (material) facts that need additional support requiring discovery.
13
See id.; see also Butcher’s Union Local No. 498 v. SDC Inv., Inc., 788 F.2d 535,
14
540 (9th Cir. 1986) (holding that district court did not abuse its discretion by
15
refusing jurisdictional discovery where the plaintiffs “state only that they ‘believe’
16
that discovery will enable them to demonstrate sufficient California business
17
contacts to establish the court’s personal jurisdiction”). On the other hand,
18
denying a request for jurisdictional discovery is an abuse of discretion where
19
discovery on an issue raised in the pleadings “might well demonstrate facts
20
sufficient to constitute a basis for jurisdiction.” See Harris Rutsky., 328 F.3d at
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION ~ 23
1
1135 (abuse of discretion to deny request for discovery to determine whether the
2
alter ego or agency test are met).
3
Here, the facts as discussed are taken in the light most favorable to Key
4
Tronic, and even under this lens, the issues underlying the Motion to Dismiss are
5
disposed of completely, without any need of additional discovery. Moreover, it is
6
not clear how additional discovery on any factual issue raised could have any
7
bearing on the outcome of the Motion to Dismiss (ECF No. 90). Indeed, Key
8
Tronic should have access to any information it may want to seek, as the only
9
information relevant for specific personal jurisdiction would necessarily relate to
10
the underlying dispute at issue. While discovery may lead to evidence Steel Tech
11
Mexico has other contacts with Washington, these contacts would not be relevant
12
for specific personal jurisdiction in the matter before the Court. Key Tronic has
13
not attempted to state what information could be gained from discovery, and the
14
Court does not see any benefit in allowing such, as the facts are sufficiently clear-
15
cut to decide the issue of personal jurisdiction.
16
It is not the case that the “record is simply not sufficient[]” to determine any
17
material issue underlying specific personal jurisdiction over Steel Tech Mexico.
18
Harris Rutsky, 328 F.3d at 1135. Key Tronic’s allegations are relatively
19
numerous, supported by adequate evidence and, in the main, are not controverted
20
by Steel Tech Mexico. Rather, Steel Tech Mexico mostly accepts Key Tronic’s
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION ~ 24
1
allegations as true, but disagrees as to the legal conclusion. In this situation,
2
allowing jurisdictional discovery is not proper.
3
ACCORDINGLY, IT IS HEREBY ORDERED:
4
1. Defendant’s Motion to Dismiss (ECF No. 90) is GRANTED.
5
2. Plaintiff’s Request for Jurisdictional Discovery (ECF No. 108) is
6
7
8
9
DENIED.
The District Court Executive is directed to enter this Order and furnish
copies to counsel.
DATED December 5, 2016.
10
11
THOMAS O. RICE
Chief United States District Judge
12
13
14
15
16
17
18
19
20
ORDER GRANTING DEFENDANT STEEL TECHNOLOGIES’ MOTION TO
DISMISS FOR LACK OF PERSONAL JURISDICTION ~ 25
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