Opinions of the United
1998 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


9-3-1998

IMO Ind Inc v. Kiekert AG
Precedential or Non-Precedential:

Docket 97-5356




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Recommended Citation
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Filed September 3, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

NO. 97-5356

IMO INDUSTRIES, INC.
Appellant

v.

KIEKERT AG
Appellee

On Appeal From the United States District Court
For the District of New Jersey
(D.C. Civ. No. 96-cv-05881)

Argued: January 22, 1998

Before: BECKER,* STAPLETON, Circuit Judges,
and POLLAK, District Judge.**

(Filed September 3, 1998)

ROBERT G. SUGARMAN, ESQUIRE
 (ARGUED)
GERALD A. STEIN, ESQUIRE
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153



_________________________________________________________________
*Honorable Edward R. Becker, United States Circuit Judge for the Third
Circuit, assumed Chief Judge status on February 1, 1998.

**Honorable Louis H. Pollak, United States District Judge for the Eastern
District of Pennsylvania, sitting by designation.
       GERALD KROVATIN, ESQUIRE
       Arseneault & Krovatin
       560 Main Street
       Chatham, NJ 07928

       Attorneys for Appellant
       IMO Industries

       PETER BARNES, ESQUIRE
        (ARGUED)
       FRANZ M. OPPENHEIMER,
        ESQUIRE
       BARBARA M. TAPSCOTT, ESQUIRE
       Swidler & Berlin, Chartered
       3000 K Street, NW
       Suite 300
       Washington, DC 20007-5116

       DOUGLAS S. EAKELEY, ESQUIRE
       NEIL P. HORNE, ESQUIRE
       Lowenstein, Sandler, Kohl,
        Fisher & Boylan
       A Professional Corporation
       65 Livingston Avenue
       Roseland, NJ 07068

       Attorneys for Appellee
       Kiekert A.G.

OPINION OF THE COURT

BECKER, Chief Judge.

This is a long arm service of process case which requires
us, for the first time, to apply the Supreme Court's decision
in Calder v. Jones, 

(1984), to a business tort.
It comes before us on the appeal of the plaintiff, Imo
Industries Inc. ("Imo"), a multinational corporation with its
principal place of business in New Jersey, from an order of
the district court dismissing its action pursuant to Fed. R.
Civ. P. 12(b)(2) for lack of personal jurisdiction over
defendant Kiekert AG ("Kiekert"), a German corporation.
The complaint alleges that Kiekert tortiously interfered with

                                  2
Imo's attempt to sell its wholly-owned Italian subsidiary to
a French corporation that was one of Kiekert's competitors.
The asserted mechanism by which the tort was
accomplished was a series of letters sent by Kiekert to the
Italian subsidiary and to the New York investmentfirm of
C.S. First Boston, Imo's representative in the sale,
threatening that Kiekert would revoke the licensing
agreement it had with the subsidiary if the deal went
through. According to Imo, the sale was never
consummated because of these threats, causing it
considerable loss.

Imo contends that personal jurisdiction over Kiekert was
proper based upon its contacts with Imo in New Jersey and
upon Kiekert's claimed commission of an intentional tort,
the effects of which were allegedly felt by Imo in New
Jersey. Because we conclude that Kiekert's contacts with
the forum would not otherwise satisfy the requirements of
due process, the question whether personal jurisdiction can
be exercised here depends upon the applicability to the
facts of Calder, in which the Supreme Court found personal
jurisdiction to be proper over nonresident defendants that
committed an intentional tort outside the forum, the unique
effects of which caused damage to the plaintiff within the
forum. We believe that for Calder to apply, the plaintiff
must allege facts sufficient to meet a three-prong test. First,
the defendant must have committed an intentional tort.
Second, the plaintiff must have felt the brunt of the harm
caused by that tort in the forum, such that the forum can
be said to be the focal point of the harm suffered by the
plaintiff as a result of the tort. Third, the defendant must
have expressly aimed his tortious conduct at the forum,
such that the forum can be said to be the focal point of the
tortious activity.

Applying this test to the present facts, we conclude that
personal jurisdiction does not exist here since Imo has not
pointed to sufficient facts demonstrating that Kiekert
"expressly aimed" its tortious conduct at New Jersey. To the
contrary, the focus of the dispute -- i.e. the proposed sale
of an Italian company to a French company and a claim of
rights by a German company pursuant to a license
agreement apparently governed by German law -- and the

                               3
alleged contacts by Kiekert (i.e., its correspondence) all
appear to be focused outside the forum. The order of the
district court will therefore be affirmed.

I. Facts and Procedural History

For purposes of this appeal, we accept the plaintiff 's
allegations as true. See Carteret Savings Bank, FA v.
Shushan, 

, 142 (3d Cir. 1992) (holding that an
appellate court reviewing an order of the district court
dismissing a case for lack of personal jurisdiction"must
accept all of the plaintiff 's allegations as true and construe
disputed facts in favor of plaintiff.") (citing In re Arthur
Treacher's Franchisee Litigation, 

, 409-10
(E.D. Pa. 1981)). However, the plaintiff bears the burden of
proving that personal jurisdiction is proper. Carteret
Savings 

(Once a defendant raises
the defense of lack of personal jurisdiction, "the plaintiff
bears the burden to prove, by a preponderance of evidence,
facts sufficient to establish personal jurisdiction.") (citing
Time Share Vacation v. Atlantic Resorts, Ltd., 

,
65 (3d Cir. 1984)).

Defendant Kiekert, a manufacturer of automobile door
latch systems, is a corporation organized, existing under
the laws of, and having its principal place of business in
the Federal Republic of Germany. Kiekert sells its products
world-wide, though only 2% of its sales derive from the
United States market.1 According to Kiekert, it does not
now engage, nor has it ever engaged in any of the following
activities in New Jersey: "the manufacture of any products;
any direct sales; solicitation or advertisement to sell its
products; any shipment of merchandise directly into or
through the state, or the supply of services there; the
maintenance of an office, a mailing address, a telephone
number, or a bank account; the ownership of any real or
personal property; the employment of any employees or
agents; or the requirement of or payment of taxes."
_________________________________________________________________

1. Kiekert's promotional literature projects that the United States market
will comprise thirty percent of its sales by the year 2000. Since this is
but a projection, it does not affect the outcome here.

                                  4
Appellee's Br. at 4. Imo does not appear to dispute these
claims.

Plaintiff Imo, a multinational corporation, is incorporated
in Delaware with its principal place of business in
Lawrenceville, New Jersey. Imo has 22 manufacturing
facilities around the world, including plants in Germany,
the United Kingdom, France and Australia. Approximately
90% of Imo's products are marketed outside of the United
States, and approximately 34% of Imo's total net sales for
1995 were in these foreign markets. Most relevant to the
present case is the fact that Imo owns all of the shares of
an Italian company, Roltra Morse, S.p.A. ("Roltra"), which
manufactures automobile door latches using technology
licensed from Kiekert. The licensing agreement was
negotiated in Germany and Italy in 1993 and it provides
that the agreement shall be governed by German law. Imo
was not a party to this licensing agreement and did not
participate in the negotiation or execution thereof.

In December 1995, Imo decided to sell its shares in
Roltra and retained the New York investment firm of C.S.
First Boston Corporation ("First Boston") to act as its
representative. On Imo's behalf, First Boston solicited bids
from corporations interested in acquiring Imo's shares of
Roltra. Valeo, S.A. ("Valeo"), a French corporation and one
of Kiekert's competitors, submitted a bid of $72 million for
the shares. Kiekert also submitted a bid, though for only
$30 million. Imo and Valeo thereafter proceeded to prepare
final agreements to close the sale of Roltra's stock for $69
million, and Kiekert was notified on or about June 12,
1996, that its bid was insufficient.

Shortly thereafter, and prior to closing, Kiekert sent a
letter to First Boston in New York stating that, under its
agreement with Roltra, Kiekert had the right to revoke its
license for the door latch technology if Roltra's shares were
sold to one of its competitors. More specifically, the letter to
First Boston, dated June 17, 1996, stated in pertinent part
that "Kiekert's license and patents . . . cannot be
transferred if [Roltra] is taken over by one of our
competitors" and if this occurs, Kiekert "would have to
retire [its] acceptance of production for these products
immediately which are manufactured under our license."

                               5
The import of such an action was clear -- if the license was
revoked, Roltra's value as a going concern would be
severely impacted. In addition, Kiekert wrote to Roltra in
Italy on July 8, 1996, similarly stating Kiekert's intent to
terminate the licensing agreement if Roltra's shares were
sold to a competitor.

First Boston forwarded the June 17 letter to Imo in New
Jersey. Imo responded directly to Kiekert by letter dated
July 9, 1996, stating its position that Kiekert was"not
entitled by contract or law to rescind or otherwise terminate
the License Agreement in the event of sale of the shares to
any third party." Imo demanded "that [Kiekert] cease and
desist from making such statements to any third party,"
and advised that if it "continue[s] to make such statements
[it] . . . will be held responsible for all damages that [Roltra]
and/or its shareholders suffer from such representations."
Roltra also forwarded the July 8 letter to Imo in New
Jersey. Imo again responded directly to Kiekert by letter
dated August 12, stating that its "tortious and illegal
conduct is seriously jeopardizing [our] ability to close this
transaction," and that "unless you immediately withdraw
your threats of termination, we are prepared tofile lawsuits
in all appropriate jurisdictions, including the United States
. . ."

In addition to the mail contacts, Kiekert officials in
Germany and Imo officials in New Jersey spoke twice by
telephone during this time concerning the license
agreement. The record reveals that representatives of Imo
initiated these calls. See Appellant's Br. at 21. Finally, Imo
requested meetings with Kiekert in an attempt to resolve
the matter. One such meeting was held in Toronto on
August 27, 1996, and two more were held on September 10
of that year in Germany. These discussions apparently
failed to persuade Kiekert to change its position.

On October 28, 1996, Valeo advised Imo of its withdrawal
from negotiations concerning the sale of Roltra's shares. By
letter, it informed Imo that "[w]e have concluded that,
irrespective of the likelihood that Kiekert's position would
prevail, Kiekert's position regarding its license can be
expected to have a disruptive impact on the business of

                               6
Roltra . . . and in particular create disturbances with
customers during the period of any litigation."

Imo thereafter sued in the District Court for the District
of New Jersey, alleging that Kiekert's actions constituted
tortious activity and caused significant damage to it in New
Jersey. Subject matter jurisdiction was premised on
diversity of citizenship. See 28 U.S.C.S 1332. According to
Imo, Valeo's decision to break off the contract negotiations
was directly caused by Kiekert's steadfast assertion of its
intent to revoke its license if the proposed sale was
consummated. As a result, Imo alleges that it has suffered
injuries in numerous forms due to its inability to
consummate the deal. First, Imo alleges that the sale to
Valeo would have resulted in a profit of more than $20
million. Second, Imo submits that, because of its inability
to sell the Roltra shares, it has been forced to reclassify
Roltra as a continuing operation, with a concomitant
restatement of its third quarter earnings. This has allegedly
resulted in the reversal of a favorable $10 million tax
benefit based on the anticipated sale, the recognition of
$4.8 million in previously deferred 1996 losses relating to
Roltra, liabilities for banking and legal fees, as well as the
diminution of Roltra's stock value. See Appellant's Br. at 9.

Kiekert moved to dismiss Imo's action for lack of personal
jurisdiction, contending that it did not have the requisite
minimum contacts with New Jersey to sustain jurisdiction
in that forum. The district court granted the motion. We
review de novo the district court's dismissal for lack of
personal jurisdiction. Vetrotex Certainteed Corp. v.
Consolidated Fiber Glass Products Co., 

, 150
(3d Cir. 1996) ("Whether personal jurisdiction may be
exercised over an out-of-state defendant is a question of
law, and this court's review is therefore plenary."); Madara
v. Hall, 

, 1514 (11th Cir. 1990).

II. Due Process Limits on the Exercise of Personal
Jurisdiction

The fundamental principles of long arm jurisdiction are
extremely familiar and, since they have been repeated
countless times in the jurisprudence, little will be served by

                               7
rescribing them at any length here. In brief, to exercise
personal jurisdiction over a defendant, a federal court
sitting in diversity must undertake a two-step inquiry.
First, the court must apply the relevant state long-arm
statute to see if it permits the exercise of personal
jurisdiction; then, the court must apply the precepts of the
Due Process Clause of the Constitution. In New Jersey, this
inquiry is collapsed into a single step because the New
Jersey long-arm statute permits the exercise of personal
jurisdiction to the fullest limits of due process. See
DeJames v. Magnificence Carriers, Inc., 

, 284
(3d Cir. 1981). This being the case, the New Jersey
Supreme Court has made it clear that New Jersey courts
look to federal law for the interpretation of the limits on in
personam jurisdiction. Mesalic v. Fiberfloat Corp., 

, 698 n.5 (3d Cir. 1990).

Personal jurisdiction under the Due Process Clause
depends upon "the relationship among the defendant, the
forum, and the litigation." Shaffer v. Heitner, 

,
204 (1977). Physical presence within the forum is not
required to establish personal jurisdiction over a
nonresident defendant. See Burger King Corp. v. Rudzewicz,

, 476 (1985). Instead, the plaintiff must show
that the defendant has purposefully directed its activities
toward the residents of the forum state, see 

or
otherwise "purposefully avail[ed] itself of the privilege of
conducting activities within the forum State, thus invoking
the benefits and protections of its laws." See Hanson v.
Denckla, 

, 253 (1958).

Where, as here, the plaintiff 's cause of action is related
to or arises out of the defendant's contacts with the forum,
the court is said to exercise "specific jurisdiction." See
Helicopteros Nacionales de Columbia, S.A. v. Hall , 

, 414 n.8 (1984).2 In order for specific jurisdiction to be
_________________________________________________________________

2. If the plaintiff 's claim does not arise out of the defendant's
contacts
with the forum, the court is said to exercise "general jurisdiction." See

& n.9. To establish general jurisdiction
over a defendant, the contacts must be shown to be"continuous and
systematic". See 

Imo does not contend that the New Jersey
courts could exercise general jurisdiction over Kiekert.

                               8
properly exercised under the Due Process Clause, the
plaintiff must satisfy a two-part test. First, the plaintiff
must show that the defendant has constitutionally
sufficient "minimum contacts" with the forum. See Burger
King Corp. v. Rudzewicz, 

, 474 (1985). Second,
for jurisdiction to be exercised the court must determine, in
its discretion, "that to do so would comport with`traditional
notions of fair play and substantial justice.' " See 

(citing International Shoe Co. v.
Washington, 

(1945)). Although this case
raises some interesting issues regarding the application of
the "fair play and substantial justice" standard, we need
not reach them since, as we discuss below, Imo has not
met its burden of demonstrating Kiekert's minimum
contacts with the forum.

We note initially that specific jurisdiction will not lie here
on the basis of Kiekert's alleged contacts with the forum
alone, for (as we detail in the margin) they are far too small
to comport with the requirements of due process. 3 Since

(Text continued on page 11)
_________________________________________________________________

3. In brief, Imo argues that specific jurisdiction can be premised on the
following contacts: (1) the June 17 letter from Kiekert to First Boston;
(2)
the July 8 letter from Kiekert to Roltra; (3) the two phone calls from
Imo's general counsel in New Jersey to Kiekert; and (4) the August and
September face-to-face meetings in Toronto and Germany. Although
neither of Kiekert's letters were sent to New Jersey, Imo asserts that
Kiekert "certainly knew" that its correspondence would both be
transmitted to Imo in New Jersey and cause injury to Imo there.
Appellant's Br. at 19. Similarly, Imo contends that Kiekert knew that the
face-to-face meetings, though occurring outside the United States, would
result in injury to Imo in New Jersey.

We believe that these contacts, considered as a whole, are insufficient
to demonstrate, even at a minimal level, that Kiekert has purposefully
directed its activities toward the forum or has purposefully availed
itself
of the privilege of conducting its activities within the forum. The weight
of authority among the courts of appeal is that minimal communication
between the defendant and the plaintiff in the forum state, without more,
will not subject the defendant to the jurisdiction of that state's court
system. For instance, this court in Carteret Savings 

, noted that "some minimal correspondence alone will not satisfy
minimum contacts." This conclusion has been reached by a number of
the other circuits, and we respect the weight of this authority. See,
e.g.,

                               9
Stover v. O'Connell Associates, Inc., 

, 137 (4th Cir.), cert.
denied ___ U.S. ___, 

(1996) ("Ordering a product or
service by telephone from a company in a different state does not subject
the customer to that state's jurisdiction."); Far West Capital, Inc. v.
Towne, 

, 1077 (10th Cir. 1995) ("It is well-established that
phone calls and letters are not necessarily sufficient in themselves to
establish minimum contacts."); Reynolds v. Int'l Amateur Athletic Fed.,

, 1119 (6th Cir. 1994) ("The use of interstate facilities such
as the telephone and mail is a secondary or ancillary factor and cannot
alone provide the minimum contacts required by due process.") (quoting
Scullin Steel Co. v. National Railway Utilization Corp., 

, 314
(8th Cir. 1982) (internal quotation marks omitted)); Cote v. Wadel, 

, 984 (7th Cir. 1986) (finding insufficient a "handful" of letters
and phone calls exchanged between plaintiff and defendant).

In the present case, not only are the communications limited in
quantity, but there is not even one direct act of"entry" into New Jersey
by Kiekert -- the letters were sent to Italy and New York, the phone calls
were placed by Imo itself, and the meetings were held in Canada and
Germany. While in some cases there might be merit to the argument
that correspondence sent to a third-party outside the forum which
foreseeably would wind up within the forum could weigh in favor of a
finding of specific jurisdiction being properly exercised, in the present
case we are not persuaded that the Kiekert letters provide such weight.
The same must be said for the two phone calls, which strike us as
purely unilateral conduct by Imo. See 

("[T]he
unilateral activity of those who claim some relationship with a
nonresident defendant cannot satisfy the requirement of contact with the
forum State.").

There is also an aspect of foreseeability that we believe is missing in
this case. The Supreme Court has concluded that"foreseeability alone
has never been a sufficient benchmark for personal jurisdiction under
the Due Process Clause . . . . [T]he foreseeability that is critical to
due
process analysis is . . . . that the defendant's conduct and connection
with the forum State are such that he should reasonably anticipate
being haled into court there." World-Wide Volkswagen Corp. v. Woodson,

, 295-97 (1980) (internal quotation marks omitted). We do
not believe that it was reasonably foreseeable to Kiekert that its
connection with New Jersey was such that that it should reasonably
have anticipated being haled into court there. From Kiekert's perspective,
it entered into a License Agreement with an Italian company in
Germany, which was to be governed by German law. Imo took no part
at all in these contract negotiations. It was perfectly reasonable,

                               10
this is an intentional tort case, we must consider whether
the application of Calder v. 

, can change the
outcome. Generally speaking, under Calder an intentional
tort directed at the plaintiff and having sufficient impact
upon it in the forum may suffice to enhance otherwise
insufficient contacts with the forum such that the
"minimum contacts" prong of the Due Process test is
satisfied. See Keeton v. Hustler Magazine, Inc., 

, 780 (1984). We therefore concentrate our minimum
contacts discussion below on the Calder test.

III. The Import of Calder v. Jones

A. The Calder Holding

In Calder, entertainer Shirley Jones brought an action in
California against the author and editor of an article which
had appeared in the National Enquirer, and which she
claimed was defamatory. The article alleged that Jones had
a problem with alcohol which prevented her from fulfilling
her professional obligations. Although the Enquirer was
distributed nationally, it had its largest circulation in
California. Defendant South, the reporter, did most of his
research in Florida, relying on phone calls to California for
information. Defendant Calder had no such contacts with
California. He reviewed and approved the initial evaluation
of the topic of the article and edited drafts to itsfinal form.
See 

Both defendants, residents of Florida,
moved to dismiss Jones' suit for lack of personal
jurisdiction.

The Court found that the exercise of personal jurisdiction
over the defendants was proper. The Court concluded:

       The allegedly libelous story concerned the California
       activities of a California resident. It impugned the
       professionalism of an entertainer whose television
       career was centered in California. The article was
       drawn from California sources, and the brunt of the
_________________________________________________________________

therefore, for Kiekert to believe when it entered into the agreement, that
it would be able to enforce its rights under the contract without being
subject to the jurisdiction of the New Jersey courts.

                                11
       harm, in terms of both respondent's emotional distress
       and the injury to her professional reputation, was
       suffered in California. In sum, California is the focal
       point both of the story and of the harm suffered.
       Jurisdiction over petitioners is therefore proper in
       California based on the "effects" of their Florida
       conduct in California. . . . [T]heir intentional, and
       allegedly tortious, actions were expressly aimed at
       California. Petitioner South wrote and petitioner Calder
       edited an article that they knew would have a
       potentially devastating impact upon respondent. And
       they knew that the brunt of that injury would be felt by
       respondent in the State in which she lives and works
       and in which the National Enquirer has its largest
       circulation.

(footnote omitted). It is from this passage that
courts have drawn what has come to be known as the
Calder "effects test." We have observed that under this test
a court may exercise personal jurisdiction over a
nonresident defendant who commits an intentional tort by
certain acts outside the forum which have a particular type
of effect upon the plaintiff within the forum. See Carteret
Savings 

.4 Imo argues that the
present case falls within Calder's purview because Kiekert
"set upon a deliberate and intentional course designed to
prevent Imo from selling Roltra to one of Kiekert's
competitors," and because "Kiekert's tortious conduct was
specifically aimed at and caused injury to Imo (a New
Jersey resident) within the State of New Jersey." Appellant's
Br. at 15. We disagree.

B. Calder and Business Torts

Calder's holding cannot be severed from its facts. In order
to reach the conclusion that jurisdiction was properly
exercised by the California court in that case, the Supreme
Court relied on three principal findings. First, the
defendant committed an intentional tort. Second, the forum
was the focal point of the harm suffered by the plaintiff as
a result of that tort. Third, the forum was the focal point of
_________________________________________________________________

4. We note that the interpretation of Calder in Carteret Savings Bank was
not necessary to our holding, and was therefore dicta.

                               12
the tortious activity in the sense that the tort was
"expressly aimed" at the forum. Essential was a corollary
finding that the defendants knew that the "brunt" of the
injury caused by their tortious acts would be felt by the
plaintiff in the forum. In applying Calder outside the
defamation context, courts have adopted varying versions of
these factors as the "effects test," yielding a mixture of
broad and narrow interpretations. Since we have not
applied Calder to a case involving business torts, we turn
to a subset of these cases for guidance.

The majority of our sister circuits that have considered
the application of Calder to business torts have adopted a
narrow construction. One such case is Far West Capital,
Inc. v. Towne, 

(10th Cir. 1995), which
assessed the following facts to determine the existence vel
non of personal jurisdiction in Utah. Towne, a Nevada
resident who owned real property in Nevada, negotiated
with plaintiff Far West Capital ("FWC"), a Utah corporation,
which was interested in developing Towne's land. Although
the negotiations occurred in Nevada, Towne sent a number
of letters and faxes to the plaintiff in Utah, and there was
an escrow account set up in Utah. Furthermore, during the
negotiations Towne hired a consultant, a Utah resident,
who occasionally picked up materials from FWC in Utah.
The parties ultimately entered into a lease, which included
a provision that the agreement would be governed by
Nevada law. FWC subsequently negotiated with a third
party in California regarding financing for the construction
of a power plant on the property. Towne interfered, and
FWC brought suit in Utah for, inter alia, intentional
interference with contractual relations. See 

Towne claimed that she was not subject to personal
jurisdiction in Utah for lack of minimum contacts. FWC
rejoined that personal jurisdiction was proper under Calder
because Towne had intentionally committed torts against it
in Utah. The Tenth Circuit held that jurisdiction would not
lie under Calder. See 

The court noted initially
that Calder did not set forth a per se rule that the
allegation of an intentional business tort alone is sufficient
to confer personal jurisdiction in the forum where the
plaintiff resides. See 

Instead, the court held

                               13
that it must still examine the "prior negotiations and
contemplated future consequences along with the terms of
the contract and the parties' actual course of dealing" and
"the contacts created by the out-of-state defendant in
committing the alleged tort." 

The court
concluded that, on the facts of this case:

       [T]here is no indication that Utah had anything but a
       fortuitous role in the parties past dealing or would
       have any role in their continuing relationship. . . .
       There is thus no evidence that defendants' alleged torts
       had any connection to Utah beyond plaintiff 's
       corporate domicile. Although FWC argues that it
       suffered the financial effects of these alleged torts in
       Utah where it is incorporated, we hold that under
       Calder and its progeny, the defendants' contacts with
       Utah are insufficient to establish personal jurisdiction
       in this case.

On facts strikingly similar to our own, the Fifth Circuit
reached a similar conclusion in Southmark Corp. v. Life
Investors Inc., 

(5th Cir. 1988). There, the
question was whether personal jurisdiction would lie
properly in Texas. Defendant Life Investors Inc. ("Life")
owned 22% of the outstanding shares of International Bank
("IB") stock. Southmark, a Georgia corporation with its
principal place of business in Texas, began negotiating with
Life to purchase its shares of IB, with Southmark
contending that the parties had ultimately formed a
contract. Life, however, sold its shares to USLICO.
Southmark brought suit in Texas against Life and joined
USLICO as a defendant, claiming tortious interference with
the alleged contract and business relations. USLICO, a
Virginia corporation, moved to dismiss for lack of personal
jurisdiction. Relying principally on Calder, Southmark
contended that the exercise of specific jurisdiction was
proper because USLICO had committed an intentional tort
against it in Texas with knowledge that it was a Texas
resident. See 

The court rejected this argument, holding that "there is
no evidence that USLICO expressly aimed its allegedly

                               14
tortious activities at Texas, nor is there evidence that
USLICO knew the brunt of Southmark's injury would be felt
there." 

court found that "nothing in the
record indicates that USLICO expressly aimed its allegedly
tortious activities at Texas, or that Texas is even the focal
point of USLICO's tortious conduct." 

The court
also underscored the fact that the oral agreement with
which USLICO allegedly interfered was negotiated outside of
the forum state, and there was no evidence that the
agreement was made or to be performed in the forum or
governed by its laws. See 

The court concluded that the fact that the plaintiff had
its principal place of business in the forum was a"mere
fortuity," and declined to exercise jurisdiction. See 

Importantly, the court reasoned:

       While it may be true that USLICO agreed to buy the
       stock knowing that Southmark has its principal place
       of business in Texas, and that Southmark is therefore
       a Texas resident for jurisdictional purposes, we do not
       think this fact standing alone would cause USLICO to
       anticipate being haled into a Texas court to answer for
       its conduct.

words, the Fifth Circuit was unconvinced of two
critical facts. First, the court was not persuaded that
Southmark would feel the brunt of the injury caused by
USLICO in Texas simply because its principal place of
business was located there. See 

court was
not persuaded that USLICO's intent to interfere with the
contractual relations of a company residing in Texas
necessarily meant that USLICO had "expressly aimed" its
tortious conduct at Texas. 

This concern over whether a court can automatically
infer that a defendant expressly aimed its tortious conduct
at the forum from the fact that that defendant knew that
the plaintiff resided in the forum was also addressed in
Esab Group, Inc. v. Centricut, Inc., 

(4th Cir.
1997), cert. denied ___U.S. ___, 

(1998).
Plaintiff, a Delaware corporation residing in South Carolina,
brought suit in South Carolina alleging that the defendant,
a New Hampshire company, participated in a conspiracy to

                               15
appropriate plaintiff 's trade secrets and customer lists. All
the alleged co-conspirators were either Florida or New
Hampshire residents. The only South Carolina "contact" in
the case was the defendant's knowledge that his acquisition
of the trade secrets could result in lowered sales for the
plaintiff. 

The Fourth Circuit concluded that this
knowledge alone did not "manifest behavior intentionally
targeted at and focused on South Carolina" under Calder.

further reasoned that while it is true that a
corporation "feels" lost sales at its headquarters, permitting
Calder to be satisfied on this basis would mean that
jurisdiction in intentional tort cases would always be
appropriate in the plaintiff 's home state, since the plaintiff
always "feels" the impact of the tort there. 

In sum, Far West, Southmark and Esab Group all stand
for the proposition that the mere allegation that the plaintiff
feels the effect of the defendant's tortious conduct in the
forum because the plaintiff is located there is insufficient to
satisfy Calder. In all of those cases, the plaintiffs failed to
point to other actions that adequately demonstrated that
the defendants targeted (or "expressly aimed" their conduct
at) the forum, and thereby showed that the forum was the
focal point of the tortious activity. See also General Electric
Capital Corp. v. Grossman, 

, 1387-88 (8th
Cir. 1993) (concluding that Calder is of little help to a
plaintiff where the "focal point of the alleged wrongdoing"
occurred outside of the forum even where the "effects of the
harm" occurred in that state); Noonan v. Winston Co., 

, 90-91 (1st Cir. 1988) (holding that Calder test was
not satisfied because defendants did not target forum even
though plaintiffs felt tortious effect there). Moreover, Calder
requires that the "brunt" of the harm be felt in the forum.
See 

. These cases cast doubt on the
assertion that a company will feel the "brunt" of a tort
injury at its principal place of business when that injury is
based on damage to contracts or property not centered in
the forum.

There is one counterpoint, however, for the Seventh
Circuit recently endorsed a broader reading of Calder. In
Janmark, Inc. v. Ready, 

(7th Cir. 1997),
both plaintiff and defendant sold mini shopping carts

                               16
nationwide; Janmark did so from its base in Illinois, and
Ready (through his company Dreamkeeper) from California.
Ready believed that he had a copyright in the Dreamkeeper
cart design, and tried to use his copyright claim to
"orchestrate an agreement" among all mini shopping-cart
sellers. 

. Janmark resisted Ready's
overtures, and Ready allegedly responded by threatening
Janmark's customers with suits for contributory copyright
infringement. According to Janmark, one such threat
induced a customer in New Jersey to cease buying from
Janmark, which Janmark contended was an intentional
tort in Illinois sufficient to establish personal jurisdiction
there under Calder.

The Seventh Circuit found that the Illinois court could
properly exercise jurisdiction over Ready. The court stated
that, after Calder "there can be no serious doubt . . . that
the state in which the victim of a tort suffers the injury may
entertain a suit against the accused tortfeasor." 

. The court further opined that since "a
wrong does not become a `tort' until an injury has
occurred," the complained-of tort of interference with
prospective economic advantage was not completed until
Janmark's customer in New Jersey canceled his order. 

court concluded, the injury (and hence the
tort) occurred in Illinois, and thus jurisdiction was properly
laid there. 

cases previously cited to be better reasoned,
we decline to follow Janmark. We believe that the Seventh
Circuit interpreted Calder too broadly when it read that
case to hold that "the state in which the victim of a tort
suffers the injury may entertain a suit against the accused
tortfeasor." 

. Even assuming
that the Seventh Circuit was only referring to intentional
torts (since Calder clearly was clearly not concerned with
negligence), such a broad sweep fails to accommodate
Calder's emphasis on the fact that the forum must be the
focal point of the harm and that the defendant must
expressly aim the tortious activity at the forum. Janmark
relies solely on the geographical locus of the harm caused;
in doing so, it fails to pay necessary attention to the

                               17
defendant's knowledge and intent in committing the
tortious activity.5

A hypothetical, posed to counsel at oral argument, may
clarify this point. Suppose X, a closely-held corporation
incorporated and located in New Jersey, purchases W, a
French widget manufacturing company. Further suppose
that Y, another French corporation that also manufactures
and distributes widgets, interferes with W's prospective
business advantage by tortiously acquiring W's largest
customer, causing the value of W's stock to plummet.
Finally, assume that Y was unaware that X had become the
owner of W at the time the tortious acts were committed.
We believe that, under Calder, X would not be able to sue
Y for its intentional torts in the New Jersey district court.
Even if we assume that the Calder test is otherwise
satisfied, it would be impossible to conclude that Y
expressly aimed its tortious activity at New Jersey since Y
simply did not know that a New Jersey corporation could
be the victim of its conduct. Under a literal reading of
Janmark, however, personal jurisdiction would appear to be
appropriate in New Jersey if we concluded (as the Janmark
court presumably would) that the injury occurred there.6

An analogous situation to our hypothetical was presented
_________________________________________________________________

5. As we explain infra in footnote 9, we need not (and do not) deal with
the "focal point of the harm" issue here.

6. To be fair, this hypothetical is different from Janmark in at least one
important respect. The hypothetical sets up a three-party scenario
wherein Y knows that it is tortiously interfering with W, but is not aware
of X, the absentee foreign owner. In Janmark, by contrast, there were
only two players -- Janmark and Dreamkeeper -- and thus it may have
been obvious to the Seventh Circuit that Janmark knew where its victim
was located (and presumably where it would feel the brunt of the injury)
when it committed its tortious acts. To that end, Janmark may not have
discussed the tortfeasor's knowledge because it simply was not in
dispute. As we discuss below, however, we believe that the presence of
such knowledge, without more, is itself insufficient to satisfy Calder's
"expressly aimed" requirement. Moreover, our speculation about what
facts may have been obvious to the panel that decided Janmark does not
change the fact that that case does not apply the"expressly aimed"
requirement and, to the contrary, contains the overly broad language

.

                               18
to the Ninth Circuit in Cybersell, Inc. v. Cybersell, Inc., 

(9th Cir. 1997). In that case, the plaintiff, an
Arizona corporation, provided Internet marketing services
through its web site under the registered service mark
"Cybersell." The defendant, a Florida corporation, provided
business consulting services through its web site under the
same name. At the time the defendant chose the name
"Cybersell" for its venture, the plaintiff 's web site was not
operational, and the Patent and Trademark Office had not
granted plaintiff 's application for the service mark. 

. Plaintiff instituted suit in the District of
Arizona, alleging, inter alia, trademark infringement, and
defendant moved to dismiss for lack of personal
jurisdiction. The Ninth Circuit rejected the argument that
jurisdiction was proper under Calder, reasoning that the
defendant's web site was "not aimed intentionally at
Arizona knowing that harm was likely to be caused there."

As with our hypothetical, even if we assume that
the plaintiff suffered its injury in Arizona (which the Ninth
Circuit did not, see id.), Calder would not support
jurisdiction here since the defendants could not have
expressly aimed their conduct at the forum.7

We recognize that a conservative reading of Calder may
significantly limit the types of business tort cases that will
_________________________________________________________________

7. In contrast is the Ninth Circuit's decision in Panavision Int'l, L.P.
v.
Toeppen, 

(9th Cir. 1998), another cyberspace case. There,
the plaintiff (who manufactured motion picture camera equipment and
whose principal place of business was in California) brought suit against
an Illinois defendant in California for dilution of its trademark. The
defendant allegedly had established a web site using Panavision's
trademark as its domain name, preventing Panavision from registering
its own web site on the Internet with the domain name "Panavision.com,"
in order to force Panavision to pay the defendant a fee to use the name
on the Internet. See 

The defendant moved to dismiss on
personal jurisdiction grounds. The Ninth Circuit disagreed, holding the
jurisdiction was proper under Calder since the defendant knew that
plaintiff would suffer harm in California because, as in Calder, the heart
of the motion picture industry is located there. See 

In
our
view, the dispositive facts of Panavision closely track those of Calder
(i.e.,
the unique relationship between the motion picture industry and the
forum), and therefore this case does not undermine the analysis in
Cybersell.

                               19
satisfy the requirements of personal jurisdiction via the
"effects test." Yet, we believe that such a result is consistent
with the Supreme Court's intended relationship between
Calder and the traditional minimum contacts analysis.
Calder did not change the fact that even in intentional tort
cases the jurisdictional inquiry "focuses on the relations
among the defendant, the forum, and the litigation." See

. Nor did Calder carve out a special
intentional torts exception to the traditional specific
jurisdiction analysis, so that a plaintiff could always sue in
his or her home state. What Calder did was recognize that,
under certain circumstances, the "plaintiff 's residence in
the forum may, because of defendant's relationship with
the plaintiff, enhance defendant's contacts with the forum.
Plaintiff 's residence may be the focus of the activities of the
defendant out of which the suit arises." 

(citing 

). That is, the unique
relations among the defendant, the forum, the intentional
tort, and the plaintiff may under certain circumstances
render the defendant's contacts with the forum -- which
otherwise would not satisfy the requirements of due process
-- sufficient.

Accordingly, we reject Janmark and agree with the
conclusion reached by the First, Fourth, Fifth, Eighth,
Ninth, and Tenth Circuits that jurisdiction under Calder
requires more than a finding that the harm caused by the
defendant's intentional tort is primarily felt within the
forum. Moreover, we agree with the Far West, Southmark,
and Esab Group decisions that the Calder "effects test" can
only be satisfied if the plaintiff can point to contacts which
demonstrate that the defendant expressly aimed its tortious
conduct at the forum, and thereby made the forum the
focal point of the tortious activity. Simply asserting that the
defendant knew that the plaintiff 's principal place of
business was located in the forum would be insufficient in
itself to meet this requirement.8 The defendant must
_________________________________________________________________

8. Thus, to return to the hypothetical raised above, the fact that Y (our
tortfeasing widget concern) knew that W (its competitor) was owned by
X (the New Jersey company) and that X would experience the injury
caused by the drop in W's value at its headquarters in New Jersey would
not by itself be enough to meet X's burden to show that Y "expressly
aimed" its conduct at New Jersey.

                               20
"manifest behavior intentionally targeted at and focused on"
the forum for Calder to be satisfied. Esab 

; see also 

. In the typical
case, this will require some type of "entry" into the forum
state by the defendant. As even the Seventh Circuit has
noted:

       In Calder as in all the other cases that have come to
       our attention in which jurisdiction over a suit involving
       intellectual property (when broadly defined to include
       reputation, so that it includes Calder itself) was
       upheld, the defendant had done more than brought
       about an injury to an interest located in a particular
       state. The defendant had also "entered" the state in
       some fashion, as by the sale (in Calder) of the
       magazine containing the defamatory material.

Indianapolis Colts, Inc. v. Metropolitan Baltimore Football
Club, 

, 412 (7th Cir. 1994).

To summarize, we believe that the Calder"effects test"
requires the plaintiff to show the following:

       1) The defendant committed an intentional tort;

       2) The plaintiff felt the brunt of the harm in the forum
       such that the forum can be said to be the focal
       point of the harm suffered by the plaintiff as a
       result of that tort;9
_________________________________________________________________

9. We note that, although we need not accept or reject for purposes of
this appeal the proposition that the effects of Kiekert's conduct were
"felt" by Imo in New Jersey, the proper resolution of this issue is far
from
clear. The alleged harm in this case was felt by a corporation, not an
individual, and at least one court has concluded that a corporation "does
not suffer harm in a particular geographic location in the same sense
that an individual does." Core-Vent Corp. v. Nobel Indus., 

,
1486 (9th Cir. 1993). Moreover, a distinction could arguably be made
between torts against a corporation resulting in specific property damage
(e.g., if Kiekert had physically destroyed Imo property) and those torts
resulting in more inchoate injuries (e.g., a decrease in stock value),
like
those alleged here. At the same time, this court has previously stated in
a personal jurisdiction case, albeit in dicta, that"[i]t is questionable
judicial policy to apply a different jurisdictional rule to individuals
than
to corporations, to small enterprises than to large ones. To indulge in

                               21
       3) The defendant expressly aimed his tortious conduct
       at the forum such that the forum can be said to be
       the focal point of the tortious activity;

As the above discussion suggests, in order to make out the
third prong of this test, the plaintiff must show that the
defendant knew that the plaintiff would suffer the brunt of
the harm caused by the tortious conduct in the forum, and
point to specific activity indicating that the defendant
expressly aimed its tortious conduct at the forum.

C. Application

In view of the foregoing analysis, the critical question in
this case is whether Imo has pointed to acts undertaken by
Kiekert which demonstrate that it "expressly aimed" its
tortious conduct at New Jersey, distinguishing it from the
defendants in Far West, Southmark, and Esab Group. Only
if this requirement is satisfied need we consider whether
the brunt of the harm was actually suffered by Imo in the
forum. At oral argument, counsel for Imo drew our
attention to the following seven facts:

       1) Kiekert knew that Imo was headquartered in New
       Jersey;

       2) Kiekert knew that Imo had agreed to sell its stock
       in Roltra to Valeo;

       3) Kiekert engaged in a series of phone calls, letters
       and meetings which interfered with the proposed
       Valeo contract;

       4) Kiekert acted with the intent to scuttle the
       contract;
_________________________________________________________________

such ad hoc determinations creates confusion where there should be
certainty. . . ." Dollar Savings Bank v. First Security Bank of Utah, 

, 214 (3d Cir. 1984). That case dealt with different factual
circumstances and was not concerned with whether a plaintiff "felt" the
effects of a defendant's tortious conduct for Calder analysis purposes.
However, because our decision is based on other grounds, we need not
decide how our reasoning in Dollar would apply in the context of a
Calder analysis.

                               22
       5) There were two calls from New Jersey to Kiekert in
       Germany;

       6) Kiekert wrote to First Boston in New York, and it
       was reasonably foreseeable that such
       correspondence would be transmitted to Imo in
       New Jersey, as evidenced by the fact that it was
       Imo (not First Boston) who actually authored the
       response;

       7) Imo put Kiekert on notice that its conduct would
       subject it to litigation in the United States.

According to Imo, these facts indicate that Kiekert acted in
a manner that specifically involved New Jersey, and
therefore Calder's targeting requirement is satisfied.

Essentially, this list boils down to two congeries of facts:
(1) what Kiekert knew or intended when it undertook its
allegedly tortious conduct; and (2) what steps Kiekert
actually took during the relevant time period. It appears
from the facts as alleged by Imo that Kiekert (unlike the
defendant in our hypothetical or the defendant in Cybersell)
knew that Imo was the parent company of Roltra, and that
Imo was located in New Jersey. And for purposes of the
present appeal, we must assume that Kiekert knew of the
proposed sale to Valeo and acted with the intent to
undermine that contract. While knowledge that the plaintiff
is located in the forum is necessary to the application of
Calder, as discussed above it alone is insufficient to satisfy
the targeting prong of the effects test. For the same
reasons, the fact that Imo advised Kiekert that it would
pursue litigation in the United States sheds no light on
whether Kiekert aimed its conduct at New Jersey.

Thus, we are left to determine whether the series of
letters, phone calls, and meetings between June and
September 1996 sufficiently demonstrate that Kiekert
expressly aimed its conduct at New Jersey. As we 

, the chronology includes the following events:

       a) The June 17 letter from Kiekert to First Boston
       stating that the Kiekert licenses could not be
       transferred if Roltra was sold to one of Kiekert's
       competitors;

                                23
       b) The July 8 letter from Kiekert to Roltra stating that
       Kiekert would terminate the licensing agreement if
       Roltra's shares were sold to a competitor;

       c) Imo's letter in response to Kiekert's letter to First
       Boston, dated July 9;

       d) Imo's letter in response to Kiekert's letter to Roltra,
       dated August 12;

       e) On two occasions during this time, Imo's general
       counsel telephoned Kiekert from Imo's New Jersey
       offices. During these conversations, Kiekert
       confirmed that if Imo sold the Roltra shares to a
       competitor, the license agreement would be
       terminated;

       f) The August 27 meeting in Toronto between
       representatives of Kiekert and Imo;

       g) The September 10 meetings between Kiekert and
       Imo in Germany.

We first consider the face-to-face meetings between
Kiekert and Imo. Since none of these meetings occurred in
New Jersey (or even in the United States), they provide no
help to Imo in demonstrating that Kiekert targeted the
forum. We turn next to the written correspondence. There
is no dispute that all of Kiekert's letters were sent either to
First Boston in New York or to Roltra in Italy. Imo submits,
however, that when Kiekert mailed these letters, it was
reasonably foreseeable that they would wind up in New
Jersey, evidenced by the fact that the responses to both
letters came from Imo's New Jersey offices. Even viewed in
the light most favorable to Imo, we believe that these facts
are insufficient to demonstrate that Kiekert expressly aimed
its conduct at New Jersey. Kiekert's two letters were sent to
New York and to Italy; even if it reasonably knew that those
letters would be forwarded to Imo in New Jersey, Kiekert's
acts were not directed there. To the contrary, an
examination of these letters reveals that Kiekert was
focusing its attention on First Boston and on Roltra, not on
Imo.

This position is supported by Reynolds v. Int'l Amateur
Athletic Fed., 

(6th Cir. 1994). The plaintiff in

                               24
that case -- Butch Reynolds, a world-class runner-- was
administered a drug test which yielded a positive result. As
a consequence, he was banned by the International
Amateur Athletic Federation ("IAAF") from competing for
two years. In addition, the IAAF issued a press release
disclosing the results of the drug test. Reynolds brought
suit in Ohio, alleging that the drug test was flawed and
claiming defamation and tortious interference with
contractual relations.

The court rejected Reynolds' claim that jurisdiction lay
under Calder, holding that: "First, the press release
concerned Reynolds' activities in Monaco, not Ohio. Second,
the source of the controversial report was the drug sample
taken in Monaco and the laboratory testing in France.
Third, Reynolds is an international athlete whose
professional reputation is not centered in Ohio. Fourth, the
defendant itself did not publish or circulate the report in
Ohio; Ohio periodicals disseminated the report. Fifth, Ohio
was not the `focal point' of the press release. The fact that
the IAAF could foresee that the report would be circulated
and have an effect in Ohio is not, in itself, enough to create
personal 

.

The fact that Imo phoned Kiekert in response to Kiekert's
letters does not change the analysis. The fact is that Kiekert
never placed a phone call to Imo in New Jersey; all of the
calls originated with Imo. Imo contends that this fact
should not be dispositive, and that these calls should still
count as contacts with the forum. Assuming for the sake of
argument that we could even characterize these calls as
contacts, we fail to see how they demonstrate Kiekert's
targeting of New Jersey as the situs of its tortious acts. Cf.
Mellon Bank (East) PSFS, N.A. v. DiVeronica Bros., Inc., 

, 556 (3d Cir. 1993) (follow-up calls by defendant
into the forum insufficient to satisfy minimum contacts).
Moreover, cases like Southmark and Far West make clear
that a few calls or letters into the forum may be of only
marginal import if the dispute is focused outside the forum.
In Southmark, for example:

       [T]he oral agreement with which USLICO allegedly
       interfered was apparently negotiated and made in
       Atlanta and/or New York, and there is no evidence that

                               25
       the agreement was made or to be performed in Texas
       or governed by Texas law. Life, the other party to the
       purported agreement, is not a resident of Texas. . ..
       The company whose stock Southmark wished to
       purchase and that USLICO did purchase was not a
       Texas corporation and it did not, so far as the record
       shows, do any business in Texas. Nor is there evidence
       that the stock was located or purchased in Texas.

(footnote omitted).

Much the same could be said here. The solicitation of
bids for Roltra was done in New York, and the bid with
which Kiekert allegedly interfered came from a French
company. The subject of the bidding was an Italian
company, and the licensing agreement upon which the
allegedly tortious activity was based appears to be governed
by German law. In that light, the fact that it may be
reasonably foreseeable that First Boston and/or Roltra
would have passed Kiekert's letters on to Imo in New Jersey
(and that Imo called Kiekert from New Jersey) cannot be
sufficient to overcome the clear implication from the
surrounding facts that New Jersey was not the focus of the
dispute. See also Far West, 

, 1077 (finding
that "phone calls and letters are not necessarily sufficient
in themselves to establish minimum contacts" when the
focus of the dispute is outside the forum).

In sum, Imo cannot demonstrate that Kiekert expressly
aimed its tortious conduct at New Jersey. Failing this, Imo
cannot rely on the Calder effects test to confer specific
jurisdiction based on Kiekert's allegedly intentional tortious
conduct. Since Imo cannot meet the minimum contacts
requirement of the Due Process Clause, we will affirm the
order of the district court dismissing this case for lack of
personal jurisdiction.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

                               26