Dillon Boiler Services Company, Inc. v. Soundview Vermont Holdings LLC

UNITED STATES DISTRICT COURT

DISTRICT OF MASSACHUSETTS

_______________________________________

)

DILLON BOILER SERVICES, CO. INC., )

) CIVIL ACTION

Plaintiff, )

) NO. 4:19-40036-TSH

v. )

)

SOUNDVIEW VERMONT HOLDINGS, )

LLC, )

)

Defendant. )

______________________________________ )

ORDER AND MEMORANDUM ON DEFENDANT’S MOTION TO DISMISS FOR

LACK OF PERSONAL JURISDICTION (Docket No. 7)

July 29, 2019

HILLMAN, D.J.

Plaintiff, Dillon Boiler Services, Co. Inc. (“Dillon”), attempts to hale the Defendant,

Soundview Vermont Holdings, LLC (“Soundview”), a Vermont corporation, into this Court to

litigate their contractual dispute arising out of work Dillon performed in Vermont for one of

Soundview’s subsidiaries. Soundview moves to dismiss pursuant to Fed. R. Civ. P. 12(b)(2) for

lack of personal jurisdiction. (Docket No. 7). Because the Court finds that asserting jurisdiction

would be inconsistent with the Due Process Clause, Soundview’s motion is granted.

Background

Dillon is a Massachusetts corporation that fabricates and repairs boilers and pressure

vessels. In August 2012, APC Paper Company (“APC”) called Dillon’s president, John

McNamara, to request that Dillon submit a proposal to covert two boilers at Putney Paper

Company (“Putney Paper”)—a wholly owned subsidiary of APC—from oil fuel to natural gas.

On August 24, Dillon submitted its proposal and the parties subsequently engaged in several

discussions by telephone, email, and fax to further negotiate the terms of a contract.

On December 6, 2012, Putney Paper prepared a purchase order for Dillon to convert the

boilers, which was sent to Dillon on January 3, 2013. After Putney Paper prepared the purchase

order, but before it was sent to Dillon, Soundview acquired Putney Paper from APC.

In February 2013, Dillon converted the boilers but the relationship between the parties

soured due to disputes regarding warranties and the amounts charged by Dillon for the work. To

date, Soundview has not paid Dillon for its work.

Standard of Review

When considering a Rule 12(b)(2) motion without an evidentiary hearing, a district court

uses the prima facie standard to evaluate whether it has personal jurisdiction over the defendant.

Under this standard, “the inquiry is whether the plaintiff has proffered evidence which, if credited,

is sufficient to support findings of all facts essential to personal jurisdiction.” Phillips v. Prairie

Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008). The plaintiff bears the burden of showing that the court

may exercise personal jurisdiction over the defendant and “must put forward evidence of specific

facts to demonstrate that jurisdiction exists.” A Corp. v. All Am. Plumbing, 812 F.3d 54, 58 (1st

Cir. 2016) (internal quotation marks and citation omitted). Further, courts “take the plaintiff’s

evidentiary proffers as true and construe them in the light most favorable to the plaintiff’s claim.”

C.W. Downer & Co. v. Bioriginal Food & Sci. Cor., 771 F.3d 59, 65 (1st Cir. 2014). Finally,

courts also “consider uncontradicted facts proffered by the defendant.” Id.

Discussion

“In determining whether a non-resident defendant is subject to its jurisdiction, a federal

court exercising diversity jurisdiction is the functional equivalent of a state court sitting in the

forum state.” Sawtelle v. Farrell, 70 F.3d 1381, 1387 (1st Cir. 1995). Thus, in order to establish

personal jurisdiction over Soundview, Dillon must satisfy the requirements of both the

Massachusetts long-arm statute and the Due Process Clause of the Fourteenth Amendment. World-

Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 290 (1980).

“[C]ourts should consider the long-arm statute first, before approaching the constitutional

question.” SCVNGR, Inc. v. Punchh, Inc., 478 Mass. 324, 330 (2017). Determining first whether

the long-arm statute’s requirements are met is consistent with the duty to avoid “decid[ing]

questions of a constitutional nature unless absolutely necessary to a decision of the case.” Burton

v. United States, 196 U.S. 283, 295 (1905).

1. Massachusetts Long-Arm Statute

The First Circuit “has sometimes treated the limits of Massachusetts’s long-arm statute as

coextensive with those of the Due Process Clause.” Copia Commc’ns, LLC v. AMResorts, L.P.,

812 F.3d 1, 4 (1st Cir. 2016) (citing Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A.,

290 F.3d 42, 52 (1st Cir. 2002)). Recently, however, it has “suggested that Massachusetts’s long-

arm statute might impose more restrictive limits on the exercise of personal jurisdiction than does

the Constitution.” Id. (citing Cossart v. United Excel Corp., 804 F.3d 13, 20 (2015)).

Because Soundview does not proffer any arguments why its contacts with the

Commonwealth do not satisfy the state’s long-arm statute, the Court need not address this potential

tension in First Circuit precedent and will proceed directly to the constitutional inquiry. See id.;

Get In Shape Franchise, Inc. v. TFL Fishers, LLC, 167 F. Supp. 3d 173, 191 (D. Mass. 2016)

(“[W]here the parties do not challenge the application of Massachusetts’s long-arm statue, courts

consider ‘any argument that the long-arm statute does not reach as far as the Fifth Amendment

allows’ waived, and ‘proceed directly to the constitutional inquiry.” (quoting Copia, 812 F.3d at

4)).

2. Constitutional Due Process

“The exercise of personal jurisdiction may, consistent with due process, be either ‘specific

or case-linked’ or ‘general or all-purpose.’” Cossart, 804 F.3d at 20 (quoting Goodyear Dunlop

Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011)). Because Dillon waives any argument

that Massachusetts may exercise general jurisdiction over Soundview, Dillon must demonstrate

that Soundview’s contacts with the Commonwealth are sufficient for the Court to assert specific

jurisdiction.

The inquiry into whether the defendant has the requisite “minimum contacts” necessary to

assert specific personal jurisdiction is inherently imprecise: “the criteria which we mark the

boundary line between those activities which justify the subjection of a corporation to suit, and

those which do not, cannot be simply mechanical or quantitative.” International Shoe Co. v.

Washington, 326 U.S. 310, 319 (1945). To assist in this necessarily individualized assessment,

the First Circuit has held that a plaintiff seeking to establish specific jurisdiction must demonstrate

that three conditions are satisfied:

First, the claim underlying the litigation must directly arise out of, or relate to, the

defendant’s forum-state activities. Second, the defendant’s in-state contacts must

represent a purposeful availment of the privilege of conducting activities in the

forum state, thereby invoking the benefits and protections of that state’s laws and

making the defendant’s involuntary presence before the state’s courts foreseeable.

Third, the exercise of jurisdiction must . . . be reasonable.

Phillips, 530 F.3d at 27 (quoting Adelson v. Hananel, 510 F.3d 43, 49 (1st Cir. 2007)).

a. Purposeful Availment

Because the purposeful availment inquiry is dispositive, the Court will proceed there

directly. “In determining whether the purposeful availment condition is satisfied, our ‘key focal

points’ are the voluntariness of the defendants’ relevant Massachusetts contacts and the

foreseeability of the defendants falling subject to Massachusetts’s jurisdiction.” Copia, 812 F.3d

at 5 (quoting Adelson v. Hananel, 510 F.3d 43, 50 (1st Cir. 2007)). Voluntariness requires that the

defendant’s contacts with the forum state are “not based on the unilateral actions of another party

or a third person.” Nowak v. Tak How Investments, Ltd., 94 F.3d 708, 716 (1st Cir. 1996).

Foreseeability requires that “the defendant's contacts with the forum state be such that he should

reasonably anticipate being haled into court there.” Id.

The First Circuit has noted that whether a defendant has purposefully availed itself of the

forum where remote communications establish the predicate for the minimum contacts turns on

three factors: “the defendant’s in-forum solicitation of the plaintiff’s services, the defendant’s

anticipation of the plaintiff’s in-forum services, and the plaintiff’s actual performance of extensive

in-forum services.” Copia Communications, 812 F.3d at 6 (describing the factors from C.W.

Downer and Cossart).

Here, Dillon cannot satisfy his burden of demonstrating that Soundview purposefully

availed itself of the privilege of conducting business in the Commonwealth. First, Soundview did

not communicate with Dillon, Putney Paper (which was then owned by APC) did. Dillon contends

that, because Soundview acquired Putney Paper, any of Putney Paper’s negotiations with Dillon

should be imputed to Soundview.

Courts generally “respect the legal independence of a corporation and its subsidiary when

determining if a court’s jurisdiction over the offspring begets jurisdiction over the parent.” United

Elec., Radio & Mach. Workers of Am. V. 163 Pleasant Street Corp., 960 F.2d 1080, 1091 (1st Cir.

1992); see also Escude Cruz v. Ortho Pharma Corp., 619 F.2d 902, 905 (1st Cir. 1980) (“The mere

fact that a subsidiary company does business within a state does not confer jurisdiction over its

nonresident parent, even if the parent is sole owner of the subsidiary.”). It is true, however, that

the “presumption of corporate separateness [may] be overcome by clear evidence that the parent

in fact controls the activities of the subsidiary.” Escude, 619 F.2d at 905. Here, nothing in the

record indicates, nor does Dillon argue, that Soundview controlled Putney Paper’s negotiations.

In fact, it seems that all of the negotiations occurred before Soundview acquired Putney Paper

since the draft agreement predated the acquisition. Consequently, the record does not warrant

imputing Putney Paper’s negotiations in the Commonwealth to Soundview and disregarding their

corporate independence.

Even if those negotiations were attributable to Soundview, however, Dillon cannot satisfy

the remaining two Copia factors necessary to confer jurisdiction. Soundview never anticipated,

nor did Dillon perform, any services in the Commonwealth. Instead, all of Dillon’s work occurred

at Putney Paper’s plant in Vermont. Cf. C.W. Downer, 771 F.3d at 67 (holding foreign corporation

subject to specific jurisdiction where the defendant contracted with a Massachusetts investment

bank and “actively caused [the plaintiff] to undertake extensive activities on [the defendant’s]

behalf within Massachusetts” (emphasis added)); Cossart, 804 F.3d at 21 (finding sufficient

contacts to assert specific jurisdiction where “United Excel recruited Cossart at his home in

Massachusetts. The resulting employment contract, as negotiated by Hornbaker, contemplated

that Cossart would continue to work from Massachusetts on United Excel’s behalf and that the

company would facilitate that work by providing the requisite office equipment” (emphasis

added)). Therefore, Dillon cannot satisfy any of the three Copia factors. As a result, Dillon has

not met its burden of showing that Soundview purposefully availed itself of conducting business

in the Commonwealth.

Conclusion

For the reasons stated above, Soundview’s motion to dismiss (Docket No. 7) is granted.

SO ORDERED

/s/ Timothy S. Hillman

TIMOTHY S. HILLMAN

DISTRICT JUDGE