The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
APR SUPPLY COMPANY, : Civil No. 1:22-CV-01887
:
Plaintiff, :
:
v. :
:
AVALON CORPORATE :
SOLUTIONS CORP., :
:
Defendant. : Judge Jennifer P. Wilson
MEMORANDUM
Before the court is a motion to dismiss for lack of personal jurisdiction
pursuant to Federal Rule of Civil Procedure Rule 12(b)(2) filed by Defendant
Avalon Corporate Solutions Corp. (Doc. 5.) The court finds that it has specific
personal jurisdiction over Defendant Avalon Corporate Solutions Corporation in
this litigation. For this reason, the court will deny the motion to dismiss.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
Plaintiff APR Supply Company (“APR”) commenced this action in the
Court of Common Pleas of Lebanon County on October 28, 2022. (Doc. 1-2.)
Defendant Avalon Corporate Solutions Corporation (“Avalon”) removed the action
to this court on November 30, 2022. (Doc. 1.) APR’s two-count complaint sets
forth claims for breach of contract and declaratory judgment. (Doc. 1-2.)
According to the allegations in the complaint, APR is a Pennsylvania
corporation with its principal place of business in Lebanon, Pennsylvania. (Doc. 1-
2, ¶ 2.) Avalon is a citizen of a foreign state, having been incorporated in Canada
and having a principal place of business in Quebec. (Id. ¶ 3.) The parties entered
into a contract titled “Statement of Work – WMS Software Implementation”
(“SOW”) for software integration on January 28, 2021, after APR sought the
services of Avalon. (Id. ¶¶ 7–8.) The parties anticipated that the software
integration would “go live” and be ready for APR’s use in December 2021. (Id. ¶
11.) After a series of problems launching the software and various rescheduled
“go live” dates, the software system failed to meet APR’s operational needs. (Id.
¶¶ 13–21.) Efforts to continue the launch of the software ceased in February 2022.
(Id. ¶¶ 22–23.)
On December 6, 2022, Avalon filed the instant motion to dismiss pursuant to
Federal Rule of Civil Procedure 12(b)(2), along with a brief in support. (Docs. 5,
6.) APR timely filed a brief in opposition on December 20, 2022, and Avalon filed
a reply brief on January 5, 2023. (Docs. 8, 12.) Thus, this motion is ripe for
review.
JURISDICTION
Under 28 U.S.C. § 1441, this action was properly removed to this court.
This court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 as the
parties have complete diversity of citizenship and the amount in controversy
exceeds $75,000. Venue is proper under 28 U.S.C. § 1391.
STANDARD OF REVIEW
Avalon moves for dismissal pursuant to Federal Rule of Civil Procedure
12(b)(2) for lack of personal jurisdiction. When a defendant moves to dismiss for
lack of personal jurisdiction, the plaintiff bears the burden of establishing the
court’s jurisdiction over the defendant. Miller Yacht Sales, Inc. v. Smith, 384 F.3d
93, 97 (3d Cir. 2004) (citing Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 368 (3d
Cir. 2002)). “However, when the court does not hold an evidentiary hearing on the
motion to dismiss, the plaintiff need only establish a prima facie case of personal
jurisdiction and the plaintiff is entitled to have its allegations taken as true and all
factual disputes drawn in its favor.” Id.
A federal court sitting in Pennsylvania in a diversity suit exercises
jurisdiction according to the law of Pennsylvania. FED. R. CIV. P. 4(k)(1)(A);
O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316 (3d Cir. 2007). The
Pennsylvania long-arm statute provides for jurisdiction “based on the most
minimum contact with th[e] Commonwealth allowed under the Constitution of the
United States.” 42 PA. CON. STAT. § 5322(b). Accordingly, the court then
considers the Due Process Clause and asks whether the defendant has “certain
minimum contacts with . . . [Pennsylvania] such that the maintenance of the suit
does not offend traditional notions of fair play and substantial justice.’”
O’Connor, 496 F.3d at 316 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310,
316 (1945)).
DISCUSSION
Avalon argues that it does not have sufficient minimum contacts with the
Commonwealth of Pennsylvania for this court to exercise personal jurisdiction.
(Doc. 6, p. 8.) Avalon also argues, in the alternative, that even if there are
sufficient minimum contacts, it would not comport with notions of fair play and
substantial justice for this court to exercise jurisdiction. (Id. at 9.) Avalon stresses
that it instituted an action in the Superior Court, Province of Quebec, District of
Montreal, on October 22, 2022. (Id.) Thus, Avalon argues, there should be no
finding of specific personal jurisdiction. (Id.)
In response, APR points to the presence of Avalon personnel on its physical
premises as evidence of activities in Pennsylvania that are sufficient to confer
specific personal jurisdiction. (Doc. 8, p. 3–4.) APR emphasizes that the SOW
contemplated Avalon traveling to APR’s premises on a regular basis to complete
the software implementation, and Avalon personnel did in fact spend time on the
APR campus. (Id. at 3.) Furthermore, multiple Avalon personnel were on-site at
APR’s physical location in Lebanon, Pennsylvania from September 2021 through
January 2022. (Id. at 4.) Finally, between December 2021 and January 2022, at
least ten Avalon personnel worked at the APR location on a near-full-time basis.
(Id.)
Personal jurisdiction may be general or specific. Gen. Elec., Co. v. Deutz
AG, 270 F.3d 144, 150 (3d Cir. 2001). General personal jurisdiction is established
when a defendant has “continuous and systematic” contacts with the forum state.
Id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414–
16 (1984)). Specific personal jurisdiction may be established if the defendant has
“purposefully directed his activities at residents of the forum and the litigation
results from alleged injuries that arise out of or relate to those activities.” Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985).
In breach of contract cases, “courts should inquire whether the defendant’s
contacts with the forum were instrumental in either the formation of the contract or
its breach.” Gen. Elec., 270 F.3d at 150 (citing Phillips Exeter Acad. v. Howard
Phillips Fund, Inc., 196 F.3d 284, 289 (1st Cir. 1999)). In modern commercial
interactions, contacts may include physical presence in the forum state or
electronic communication with a business that is physically located in the forum
state. Id. at 150–51. It is not significant which party initiated the business
relationship, but rather, “the intention to establish a common venture extending
over a substantial period of time is a more important consideration.” Id. at 151.
A. General Personal Jurisdiction
General personal jurisdiction over a foreign corporation is established when
that corporation’s contacts with the forum state are “so ‘continuous and systematic’
as to render them essentially at home in the forum [s]tate.” Goodyear Dunlop
Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) (citing Int’l Shoe, 326
U.S. at 317). Here, the court agrees with the parties that Avalon, having been
incorporated in Canada and with its principal place of business in Canada, is not
subject to general personal jurisdiction in the Commonwealth of Pennsylvania.
B. Specific Personal Jurisdiction
The Due Process Clause protects defendants from being subject to
judgments in fora in which that defendant lacks meaningful contacts. Int’l Shoe,
326 U.S. at 319. Specific personal jurisdiction allows for a court to exercise
jurisdiction over a defendant that is “less intimately connected with a State, but
only as to a narrower class of claims.” Ford Motor Co. v. Mont. Eighth Judicial
Dist. Court, 141 S. Ct. 1017, 1024 (2021). The requirements of specific
jurisdiction aim to afford some predictability for defendants to know when they
may be held liable to suit in a certain jurisdiction. World-Wide Volkswagen Corp.
v. Woodson, 444 U.S. 286, 297 (1980).
The specific jurisdiction analysis consists of a three-prong test: (1) whether
the defendant purposely directed its activities at the forum state; (2) whether the
litigation arises out of or directly relates to one of those activities; and (3) whether
the exercise of jurisdiction otherwise comports with notions of fair play and
substantial justice. O’Connor, 496 F.3d at 317. The third prong of fair play and
substantial justice need only be considered if the first two prongs are met. Id. In
this case, Avalon argues that it did not direct sufficient activities to Pennsylvania to
establish specific personal jurisdiction. In the alternative, Avalon submits that
there is no specific personal jurisdiction over it because the third prong of fair play
and substantial justice is not satisfied.
1. Prong One: Whether Avalon purposely directed sufficient
activities at Pennsylvania
The first prong asks whether the defendant purposefully directed sufficient
activities at the forum state. In reviewing this issue, the court should consider
whether the defendant purposefully established “minimum contacts” in the forum
state. Burger King, 471 U.S. at 474 (citing Int’l Shoe, 326 U.S. at 316). The
minimum contacts must be purposefully directed at the forum state, in such a way
that the defendant deliberately interacted with the forum state or created
“continuing obligations” between itself and residents of the forum state. Id. at
475–76. This is often referred to as the “purposeful availment” requirement. Id. at
475.
In this case, Avalon purposefully established sufficient contacts with APR to
render it subject to jurisdiction in Pennsylvania. In addition to the SOW being
delivered to and executed at APR’s Pennsylvania address, the SOW also
considered the possibility of Avalon employees spending time working in-person
in Pennsylvania at the APR offices. Furthermore, the SOW established a
continuing relationship between Avalon and APR as APR’s software was
developed. Avalon staff members did, in fact, spend a significant amount of time
working at APR’s Pennsylvania offices. These physical and contractual contacts
are sufficient to establish minimum contacts that were purposefully directed
towards Pennsylvania. Therefore, the first prong, requiring purposefully directed
sufficient contacts with the forum state, is met.
2. Prong Two: Whether this litigation arises out of or directly
relates to Avalon’s activities with APR in Pennsylvania
The second prong of the court’s analysis aims to ensure a connection
between the subject litigation and the defendant’s activities in the forum state.
Bristol-Myers Squibb Co. v. Superior Court, 141 S. Ct. 1017, 1781 (2017). When
there are sufficient contacts with a forum state, courts may consider whether those
contacts caused the litigation in question, though “some relationships will support
jurisdiction without a causal showing.” Ford Motor Co., 141 S. Ct. at 1026.
Courts have established three separate tests to determine whether litigation
arises out of or relates to the contact established by the defendant in the forum
state: (1) the proximate cause/substantive relevance test; (2) the but-for causation
test; and (3) the substantial connection test. O’Connor, 496 F.3d at 319. The
standard for contract cases has effectively been the substantive relevance test, in
which courts ask whether “the defendant’s contacts with the forum were
instrumental in either the formation of the contract or its breach.” Id. at 320
(quoting Gen. Elec., 270 F.3d at 150) (internal quotations omitted). Because
Avalon’s contacts with Pennsylvania were a direct result of its contract with APR,
this standard is easily met under any of these tests. Therefore, the second prong is
satisfied.
C. Prong Three: Whether the exercise of jurisdiction otherwise
comports with notions of fair play and substantial justice
Once the first two prongs have been satisfied, the court will consider
whether traditional notions of fair play and substantial justice are met when the
court exercises personal jurisdiction over the defendant. O’Connor, 496 F.3d at
317. There are a number of factors for the court to consider, specifically, “the
burden on the defendant, the forum State’s interest in adjudicating the dispute, the
plaintiff’s interest in obtaining convenient and effective relief, [and] the interstate
[and international] judicial system’s interest in obtaining the most efficient
resolution of controversies.” Burger King, 471 U.S. at 477. When a defendant that
has purposefully directed activities at the forum state seeks to dismiss for lack of
personal jurisdiction, the defendant must present “a compelling case that the
presence of some other considerations would render jurisdiction unreasonable.”
Id. Minimum contacts alone makes jurisdiction “presumptively constitutional.”
O’Connor, 496 F.3d at 324. Thus, when minimum contacts are present, personal
jurisdiction will only be unreasonable in rare cases. Pennzoil Prods. Co. v. Colelli
& Assocs., Inc., 149 F.3d 197, 207 (3d Cir. 1998).
Avalon argues that jurisdiction in Pennsylvania is unreasonable because
litigation is already pending in Canada, and the Canadian litigation was filed
before the litigation in Pennsylvania. (Doc. 6, p. 9.) Although Avalon was the
first to file suit, and it certainly is inconvenient for Avalon to litigate in
Pennsylvania, that is not enough to satisfy the high bar to render jurisdiction in
Pennsylvania unreasonable. Because Avalon established minimum contacts with
Pennsylvania, jurisdiction in Pennsylvania is presumed, and Avalon must show
that more of the factors weigh in its favor as to make it a rare case in which
jurisdiction in Pennsylvania would be unreasonable. Avalon has not shown that
more factors weigh in its favor, and therefore jurisdiction in Pennsylvania is
reasonable. Having found jurisdiction in Pennsylvania to be reasonable, it follows
that such jurisdiction comports with notions of fair play and substantial justice.
CONCLUSION
For the reasons stated herein, the court finds that it has specific personal
jurisdiction over Avalon. Therefore, the court will deny Avalon’s motion to
dismiss. An appropriate order will issue.
s/Jennifer P. Wilson
JENNIFER P. WILSON
United States District Court Judge
Middle District of Pennsylvania
Dated: February 27, 2023