Creative Calling Solutions, Inc. v. LF Beauty Ltd., 799 F.3d 975 (8th Cir. 2015) [click for opinion]
Plaintiff Creative Calling Solutions, an Iowa corporation, filed suit against Defendant LF Beauty Ltd., a Hong Kong corporation, for breach of contract in an Iowa state court. Defendant removed the suit to federal district court in Iowa, and successfully moved to dismiss for lack of personal jurisdiction. Plaintiff appealed to the Eighth Circuit, arguing that Defendant was subject to specific jurisdiction in Iowa to answer Plaintiff’s breach of contract claim.
The court determined that Plaintiff identified sufficient facts to support the argument that Defendant established minimum contacts with Iowa that permitted the exercise of personal jurisdiction. Defendant contacted Plaintiff in Iowa to solicit business in the form of a contract to manage Plaintiff’s operations infrastructure in China, and corresponded with Plaintiff numerous times via email and telephone during three months of contract negotiations. After the contract was executed, the parties communicated daily by telephone and email for nearly two years. The court held that, while such communications do not themselves establish jurisdiction, they may be used to support the exercise of personal jurisdiction, and Defendant’s contacts supported the conclusion that Defendant purposefully established contacts with the forum.
Additionally, the contract required Defendant to make pre-production samples of Plaintiff’s products, that Plaintiff approve those samples, and that Defendant’s expenditures to send samples to Plaintiff would be passed through with no additional fees. Defendant shipped thousands of samples from Hong Kong to Plaintiff’s principal place of business in Iowa. The court held that, because the contract expressly called for Defendant to ship samples to Plaintiff in Iowa, Defendant’s shipments of those samples pursuant to the contract constituted a significant and purposeful connection with the forum. The Eighth Circuit used the volume of samples and presence of the contractual shipment requirement to distinguish a previous case where it had held that shipment of four samples into the forum was a casual or fortuitous contact.
The contract also provided for Defendant to receive payments from customers on behalf of Plaintiff and to forward those payments to Plaintiff. The court held that this type of contractual provision, along with Defendant’s performance of that provision, constituted a purposeful contact with the forum.
Noting that Plaintiff’s breach of contract claim alleged that Defendant delivered defective samples, the Eighth Circuit held that Plaintiff’s claim arises out of and relates to Defendant’s connections to Iowa, such that Defendant’s minimum contacts permitted the exercise of specific jurisdiction.
The Eighth Circuit then considered whether the exercise of jurisdiction would be reasonable under the Due Process Clause requirement that it comport with “traditional notions of fair play and substantial justice.” To assess whether the exercise of jurisdiction over a defendant is reasonable, the court considers the interests of the forum State, the burden on the defendant, and the plaintiff’s interest in obtaining relief. Here, the court held that the exercise of personal jurisdiction was reasonable, particularly in light of Iowa’s obvious interest in providing a local forum for its residents to litigate claims, along with the fact that neither of the parties’ interests weighed strongly against personal jurisdiction in Iowa because the samples were in Iowa and Defendant’s witnesses were in both Hong Kong and Iowa. The contract’s selection of Hong Kong courts as a non-exclusive forum and its choice of Hong Kong law were not sufficient to diminish Iowa’s interest or to show that the exercise of jurisdiction in Iowa would be unreasonable.
The Eighth Circuit reversed the district court’s dismissal of the action and remanded the case for further proceedings.
Paul Chappell of the Dallas office contributed to this summary.