Appendix — Jensen v. Gates Learjet Corp.

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OS? LY FV J Miica- Supreme Court, US.

os veg FILED

MAR 4 1985

AEEXANOER Lk. STEVAS,

Sean, ——

IN THE SUPREME COURT OF THE

UNITED STATES

October Term, 1984

JAMES B. JENSEN, JR.; RICARDO S.

TOMACRUZ; LEARJET PHILIPPINES, INC.,

a corporation; JAMES B. JENSEN & CO.,

INC., a corporation and HAMIX

INTERNATIONAL, LTD., a corporation,

Petitioners,

Vv.

GATES LEARJET CORPORATION and GATES

LEARJET EXPORT CORPORATION,

Respondents.

On Appeal from the Ninth Circuit

Court of Appeals

Appendix to Petition for

Writ of Certiorari

Herbert Mallamo

Molloy, Jones, Donahue, Trachta,

Childers & Mallamo, P.C.

4041 North Central Avenue, Suite 2001

Phoenix, Arizona 85012

Telephone: (602) 263-7784

No.

IN THE SUPREME COURT OF THE

UNITED STATES

October Term, 1984

JAMES B. JENSEN, JR.; RICARDO S.

TOMACRUZ; LEARJET PHILIPPINES, INC.,

a corporation; JAMES B. JENSEN & CO.,

INC., a corporation and HAMIX

INTERNATIONAL, LTD.,; a corporation,

Petitioners,

Vv.

GATES LEARJET CORPORATION and GATES

LEARJET EXPORT CORPORATION,

Respondents.

On Appeal from the Ninth Circuit

Court of Appeals

Appendix to Petition for

Writ of Certiorari

Molloy, Jones, Donahue,

Trachta, Childers &

Mallamo, P.C.

4041 N. Central Avenue,

Suite 4041

Phoenix, Arizona 85012

Telephone (602) 263-7784

INDEX TO APPENDIX

TO PETITION FOR WRIT OF CERTTORART

FILING

NO. DATE

1 9/23/82

2 5/31/83

3 11/1/83

4 9/27/84

5 11/27/84

DESCRIPTION

Order

Memorandum of

Decision and

Order

Opinion

Order

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

GATES LEARJET CORPORATION

and GATES LEARJET EXPORT

CORPORATION, NO. CIV 82-139

TUC ACM

Plaintiffs,

QR DER

vs.

)

JAMES B. JENSEN, JR., )

RICARDO S. TOMACRUZ; )

LEARJET PHILIPPINES, INC., )

a corporation; JAMES B. )

JENSEN & CO., INC., a )

corporation, and HAMIX )

INTERNATIONAL, LTD., a )

corporation, )

)

Defendants.

He ee

Plaintiffs Gates Learjet Corporation,

and Gates Learjet Export Corporation have

moved to amend the court's order of August

20, 1982. A review of the record reveals

that prior to August 20th, James B. Jensen

& Co., Inc. had been properly served, and

therefore the court hereby amends its

order insofar as it had quashed service on

that defendant.

APPENDIX 1

Plaintiffs have since submitted proof

of service upon defendant James Jensen,

Jr. in the Republic of Philippines. The

court is satisfied, pursuant to

Fed.R.Civ.P. 4(i) (2) dealing with service

in a foreign country, that service has

been properly made on James Jensen, Jr.

Plaintiff's have also requested a

ruling on defendant James B. Jensen & Co.,

Inc.'s motion to dismiss for lack of

personal jurisdiction. The court has

reviewed the information submitted in the

pleadings, including the affidavits and

discovery materials, and finds that there

is sufficient basis for ruling on defen-

dant James B. Jensen & Co., Inc.'s motion.

The plaintiffs, Gates Learjet

Corporation, and Gates Learjet Export

Corporation, are Delaware corporations

authorized to transact business within the

State of Arizona. Plaintiffs, herein

after called "GLC", have extensive

manufacturing and marketing facilities

located in Tucson, Arizona, where GLC also

conducts annual distributorship confer-

ences.

Defendant James B. Jensen & Co.,

Inc., hereinafter called "Jensen, Inc.",

is a California corporation, with its

principal place of business in a state

other than Arizona, more specifically in

San Francisco, California. The president

of Jensen, Inc. is Mr. James Jensen, Ur.,

who on several occasions has traveled to

GLC facilities in Tucson, Arizona.

On or about the last week in February

1978, Mr. Jensen traveled to Tucson,

Arizona and discussed with GLC the possi-

bility of becoming the GLC distributor for

the Philippine area. Mr. Jensen states

that none of his discussions with GLC

concerned Jensen, Inc., and that a new

corporation would be formed in the event a

distributorship was granted. Mr. Jensen

also states that all negotiations relative

to the distributorship were done by

telephone, correspondence and telex from

San FRancisco, and from Manila.

GLC maintains that on these occasions

Mr. Jensen was acting in a multiple

Capacity, and a review of letters written

by Mr. Jensen indicates’ such was. the

case, In a letter dated March l, 1978,

Mr. Jensen states *. « 6 Oy Gesizce te

actively sell Gates Learjets in the

Philippines.” In this letter, Mr. Jensen

repeatedly uses the term "we" in discuss-

ing his capability to successfully market

aircraft. This letter is written on

Jensen, Inc. letterhead, and is signed in

his capacity as president of Jensen, Inc.

Nowhere in this letter is there mention of

a new corporation; instead, Mr. Jensen

Se ee ee ee ee ee)

writes of another existing company,

Aviation Specialist, Inc., which he

personally owns, and which sells aircraft

and aircraft parts.

Finally, in this letter, Mr. Jensen

States that “they” are most anxious to get

underway, needing only word from GLC, to

Start actively selling Gates Learjets in

the Philippine area.

aA letter Gated March 20, 1978,

written by Mr. Jensen in his capacity as

president of Jensen, Inc. and on company

letterhead, provides further evidence of

Jensen, Inc.'s role. Mr. Jensen inter-

Mingles the terms "I" and "we" when

referring to their marketing capability

and selling activity. Again, there is no

indication of a new corporation, whether

in existence, or to be formed later.

There are additional letters, dated

May 4, May 19, May 22, and May 25, 1978,

all dealing with the marketing operations

in the Philippines, and written on Jensen,

Inc. letterhead. Again Mr. Jensen’ uses

the term "we" when discussion promoting

and selling of GLC products.

The parties entered into a distribu-

torship agreement, with the name of

Learjet Philippines, Inc. shown as_ the

distributor, on January i, 1980. Learjet

Philippines, Inc. is another defendant in

this case and is a Philippine corporation,

formed sometime in 1978. The president of

Learjet Philippines is Mr. Jensen, and

Jensen, Inc. holds a fifteen percent

interest. A review of several letters

from Mr. Jensen, signed in his capacity as

president of Learjet Philippines, and on

Learjet Philippines letterhead, reveals

the degree of interrelationship between

Jensen, Inc. and the new corporation.

In a October 12, 1978 letter,

Mr. Jensen writes to GLC, Wichita, Kansas,

requesting a discount for both Jensen,

Inc. and Learjet Philippines and in which

he refers to Jensen, Inc. as "Our San

Francisco office".

He further asks, "I wish to request

that your firm grant Learjet Philippines,

Inc. and our U.S. affiliate company James

B. Jensen & Co., Inc. the customary

discounts you normally extend to your

international distributors." One can

reasonably conclude that Mr. Jensen

himself considers Jensen, Inc. an active

distributor of GLC products, working in

concert with the names distributor,

Learjet Philippines. This association is

made clearer in another letter dated

September 28, 1981, to GLC personnel in

Tucson on Learjet Philippines letterhead,

Signed by Mr. Jensen as president.

He writes:

In the filed of spares

support Learjet

Philippines as well as

its U.S. purchasing

arm, James B. Jensen &

Co., Inc., purchased

directly from Gates

Learjet Corporation

Spares in the amount

of U.S. dollars

$75,544.68 in 1980 and

$131,141.61 to date in

1981, all for its

account in support of

the Philippine fleet.

The fact that one sum is used for the

purchasing activity of two companies, and

all for the support of the Philippines

fleet, which is the area of distributor

responsibility under the agreement,

buttresses the conclusion that Jensen,

Inc. is an active member in the marketing

activity which is the subject matter of

the distributorship agreement.

The original distributorship was for

a period of one year, and subsequently was

extended for two years, and finally for an

additional period of four months. This

agreement expired on April 30, 1981, and

has not been extended or renewed by GLC.

Plaintiffs' complaint, which was removed

to this court on March 15, 1982, is based

on four counts. Count one alleges

continued use of GLC trade name and

trademark in violation of the distributor-

ship agreement termination; count two

alleges abuse of process in the Philip-

pines. Count three alleges interference

with contractual and business relations,

and count four alleges the defendants

conspired to make unauthorized use of GLC

trademark and name. For the purposes of

determining personal jurisdiction over

Jensen, Inc., counts one and four will be

treated as asserting the same claim,

i.e. unauthorized use of GLC trade name

and trademark in violation of the agree-

ment.

A federal court, in a diversity case

Such as the one at bar, has jurisdiction

only if a court of the state in which the

federal court is sitting would have

jurisdiction. Fed.R.Civ.P. 4(e) and

4(d)(7). See 2 Moore's Federal Practice

44.41-1{1] and 4.32 [2] (2d ed. 1981).

Jurisdiction over Jensen, Inc. must

therefore be based upon Arizona's long-arm

statute under Arizona Rule 4(e)(2).

Traditionally, a two-tier analysis was

used to determine whether a court had

personal jurisdiction when using a state's

long-arm statute. The first step was to

determine if the defendant had qualified

under the wording of the statute. If this

requirement was met, the second step was

to determine if exercise of jurisdiction

satisfied constitutional due process

standards. However, recent cases have

held that where the state's long-arm

Statute has been construed by the state

court to establish jurisdiction to the

maximum extent permitted by due process,

the federal court need only consider

whether asserting jurisdiction would

violate due process. Insurance Co, of

North America v, Marina Salina Cruz, 649

F.2d 1266, 1269 (9th Cir. 1981). This

approach is available to this court as the

Supreme Court of Arizona has stated that

Rule 4(e)(2) is intended to permit the

exercise of personal jurisdiction over

non-residents to the full extent of the

law. Houghton. v, Piper. Aircraft Corp.,

112 Ariz. 307, 542 P.2d 24 (1975).

In assessing whether exercise of

personal jurisdiction over Jensen, Inc.

would violate due process, we must look to

the standards established by the Supreme

Court in Internationa] Shoe Co, v,. Wasb-

ington, 326 §6©.U.S. 310 (1945); Hanson

ve. Denckla, 357 U.S. 235 (1958); and

World-wide Volkswagon Corp, v, Woodson,

444 U.S. 286 (1980). The Ninth Circuit,

with these cases in mind, first looks to

the quantity and quality of defendants'

activities. It the defendants' activities

within the state are Substantial, or

continuous and systematic, the minimum

contacts standard is satisfiec to estab-

lish general jurisdiction, and therefore

the cause of action need not arise from

the defendants’ forum-related activities.

Data ___ Disc, Inc, y. Systems___ Technology

Assoc's., Inc., 557 F.2d 1280, 1287

(1977); Swensen v. Murchison, 507 F.Supp.-

509, 511 (N.D.Cal. 1981). Jensen,

Inc. does not transact business within

Arizona on a continuous or systema-

tic basis, and does not provide the kind

of contacts that would sustain exercise of

general jurisdiction.

In Data Disc., sgupra, the Ninth

Circuit further refined personal jurisdic-

tion analysis and held that where general

jurisdiction does not lie, the court must

examine each cause of action or claim

separately and determine whether it has

jurisdiction on that claim. Id. at 1287,

1288. The Ninth Circuit developed a three

part analysis to apply where the nonresi-

dent defendant's activities with the state

do not permit general jurisdiction.

Id. at 1287.

1. The nonresident defendant, must

do some act or consummate some

transaction with the forum or

perform some act by which he

purposefully avails himself of

the privilege of conducting

activities in the forum.

Y The claim must be one which

arises out or results from the

defendant's forum-related

activities.

: The exercise of jurisdiction

must be reasonable. [d.

COUNT _ONE_AND_ COUNT. FOUR

As stated earlier, the basis of these

Claims is the unauthorized use of GLC

trade name and trademark, in violation of

the termination of the distributorship

agreement. These claims flow directly

from the distributorship agreement. The

distributorship agreement was entered into

only after a lengthy and thorough negotia-

tion process, during which Jensen, Inc.,

through its president, participated

fully. Defendant's forum related activi-

ties satisfy part one of the Data Disc

test. Part two is also satisfied by the

fact that, as stated above, counts one and

four arise out of the termination of the

agreement, an agreement which is the

direct result of defendant's forum related

activity. Part three of Data Disc is

likewise satisfied. Jensen, Inc. aggres-

Sively solicited the distributorship

contract, conducting a well-planned and

persuasive promotional campaign to secure

the distributorship from GLC. Defendant.

therefore, "purposefully availed himself

of the privilege of conducting” its

working relationship with GLC within

Arizona, not only in’ person, but through

the mail, telephone and wire service.

Swensen v. Murchison, supra, at 513. As

to count one and four, the court has

jurisdiction over defendant Jensen, Inc.

COUNT TWO AND COUNT THREE

These claims sound in tort law, and

need to be examined with regard to both

the conduct that gave rise to the claim,

and the injury that resulted therefrom.

See Data Disc, Inc. v. Systems_Technology

Assoc,'s, Inc., supra, at 1288. Defen-

dant's conduct, with respect to count two,

Cannot be said to have taken place in

Arizona. Plaintiff alleces that defendant

caused the property of plaintiff in the

Philippines to be seized, and cause the

arrest, in the Philippines, of one of

plaintiff's employees. Count two also

alleges that defendant has filed two civil

actions in the Phillippines, all for the

purposes of harassing, intimidating and

threatening the plaintiffs. Not only has

all the conduct giving rise to this claim

occurred in the Philippines, but the

injury if any has occurred there. Both

part one and two of Data Disc, where the

"claim must arise out of or result from

the defendant's forum related activities,"

are not satisfied. Even if plaintiff

could argue that some injury has occurred

in Arizona as result of defendant's

conduct without the state, due process

would not be satisfied. Cf. Northern

Propane Gas__Co, v. Kipps, 127 Ariz. 522,

622 P.2d 469 (1980) (negligence action,

where one of injured parties was resident

of Arizona).

In count three plaintiffs allege

defendant deliberately interfered with the

contractual and business relations of the

plaintiffs and their potential customers

by threatening and intimidating potential

customers of the plaintiffs. This claim

Similarly fails to satisfy the require~-

ments of Data Disc. No tortious activity

can be considered to have occurred within

the forum if the conduct and harm occurred

outside the state. See Lehigh Valley

Industries v, Birenbaum, 527 F.2d 87, 94

(2d Cir. 1975). In the case at bar, if

there was a loss of customers, it was

Clearly customers in the area of the

Philippines, and not in the forum state.

The principal contact relied upon by

GLC is the activities defendant engaged in

while procuring the distributorship. We

have already discussed how such a rela-

tionship as existed between Jensen,

Inc. and the other defendants gave rise to

jurisdiction over claims directly related

to the agreement, such as disputes over

termination thereof as in counts one and

four. But the claims of counts’ two and

three, sounding in tort law, cannot be

said to arise out of the distributorship

agreement. These claims result from the

conduct of defendant outside the state,

and are too attenuated a contact to

justify exercise of personal jurisdic-

tion. Therefore,

IT IS ORDERED that defendant Jensen,

Inc.'s motion to dismiss for lack of

personal jurisdiction is denied as_ to

counts one and four and granted as to

counts two and three.

DATED this 23 day of September,

1982.

ALFREDO C. MARQUEZ

United States District

Judge

Copies mailed this date to:

MR. GARY F. HOWARD

MOLLOY, JONES, DONAHUE, TRACHTA,

CHILDERS & MALLAMO, P.C.

P.O. Box 2268 :

Tucson, Arizona 85702

Attorneys for Defendants

MICHAEL J. RUSING

BILBY, SHOENHAIR, WARNOCK & DOLPH, P.C.

P.O. Box 871

Tucson, Arizona 85702

Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT

DISTRICT OF ARIZONA

Civil Case No. CIV-82-139-TUC-ACM

Date May 31, 1983

Title: GATES LEARJET CORP. vs. JAMES

B. JENSEN, et al.

Present: HON. ALFREDO C. MARQUEZ JUDGE

Renee Ludeke _ Gus Rico

Deputy Clerk Court Reporter

ATTORNEYS FOR PLAINTIFF(s)

William H. Tinney

Michael Rusing

ATTORNEYS FOR DEFENDANT (s)

Gary F. Howard

Proceedings: _X Open Court

PLTFS' MOTION TO COMPEL AND FOR SANCTIONS;

DEFTS' MOTION TO DISMISS

Hearing had. IT IS ORDERED that all

new discovery is stayed until further

Order of the Court. Counsel are directed

to file a written request for any further

APPENDIX 2

discovery setting forth purpose of

discovery; witnesses to be deposed, etc.

Court's order of September 23, 1982

is clarified to reflect that Counts 2 and

3 are dismissed as to all parties named in

those counts.

IT IS ORDERED that the Clerk is to

accept for filing the depositions of James

B. Jensen, Jr. and Ricardo S. Tomacruz in

this case.

IT IS FURTHER ORDERED that the Motion

to Compel Answers to the Interrogatories

is granted; Motion to Compel re_ the San

Francisco Depositions is taken under

advisement.

IT IS FURTHER ORDERED that all

further discovery motions to be filed in

this case are to be heard in this court.

IT IS FURTHER ORDERED that the motion

for sanctions is granted. Defendants are

ordered to pay the sum of $500.00 in

attorneys fees pursuant to Rule 37.

Plaintiffs are directed to file an

affidavit re time spent in support of the

motions for sanctions. Defendants have

five (5) days to respond to the affi-

Gavit. The order for sanctions will stand

until receipt of affidavit and opposition

at which time the court will make a final

determination.

IT IS FURTHER ORDERED that the motion

to dismiss is denied with leave to renew.

Counsel are further Girected to

notify each other by letter with a copy to

the court of which paragraphs’ they have

complied with in the stipulation entered

into which was filed on May 9, 1983.

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

GATES LEARJET CORPORATION

and GATES LEARJET EXPORT

CORPORATION,

Plaintiffs,

vs.

JAMES B. JENSEN, JR.;

RICARDO S. TOMACRUZ;

LEARJET PHILIPPINES, INC.,

a corporation; JAMES B.

JENSEN & CO., INC., a

corporation, and HAMIX

INTERNATIONAL LTD., a

corporation,

No. CIV

Defendants. 82-139 TUC

ACM

JAMES JENSEN, JR.; RICARDO

S. TOMACRUZ; and LEARJET MEMORANDUM

PHILIPPINES, INC., a OF DECISION

corporation, AND ORDER

Counterclaimants,

vs.

GATES LEARJET CORPORATION;

GATES LEARJET EXPORT

CORPORATION; B.S.

STILLWELL and JANE DOE

STILLWELL, husband and

wife; and STILLWELL

AVIATION AUSTRALIA PTY.,

LTD.,

Counterdefendants.

ld a ti a ti i ti tl til ~_— ~—

APPENDIX 3

Gates Learjet Corporation [GLC] is a

Manufacturer of jet aircraft. Gates

Learjet Export Corporation (GLEC) is a

corporation organized to handle interna-

tional sales for Gates Learjet. Defendant

James B. Jensen, Jr. is a resident of

California and the Philippines. Defendant

Tomacruz is a citizen and resident of the

Philippines. Defendant Learjet Philip-

pines, Inc. (Lear Phil) is a nonresident

foreign corporation established pursuant

to the laws of the Philippines with its

principal offices in Manila. Defendant

James B. Jensen & Company, Inc. (Jensen,

Inc.) is a California corporation whose

principal place of business is San

Francisco, California. Defendant Hamix

International Ltd. (Hamix) is a nonresi-

dent foreign corporation whose principal

Place of business is Hong Kong, British

Crown Colony.

The complaint [Count One] alleges

that on Jenuary 1, 1980, Jensen and

Tomacruz on their own behalf and on behalf

of Lear Phil, Jensen, Inc. and Hamix

entered into an international distribu-

tor'’s agreement, whereby Lear Phil would

become the distributor of Learjet Aircraft

in the Philippines for one year. Plain-

tiff alleges that the agreement expired on

April 30, 1981, and was not thereafter

renewed or extended, that in spite of the

termination of the agreement the defen-

dants' Lear Phil, Jensen and Tomacruz

wrongfully continued to represent them-

selves as distributors or agents for the

plaintiffs and to use the plaintiffs'

exclusive trade names and trademarks for

their own benefit and for the purpose of

confusing potentional Gates Learjet

Customers to the detriment of the plain-

tiffs. Plaintiffs allege that Hamix and

Jensen, Inc. are corporations formed by

the defendants Jensen, Tomacruz and Lear

Phil and are mere conduits through which

the other defendants conduct their

business and hide their assets and any

judgment awarded to plaintiffs should be

awarded against these corporations.

Counts Two and Three allege that the

Gefendants Lear Phil, Jensen and Tomacruz

have filed two civil actions and one

criminal complaint in the Republic of the

Philippines against the plaintiffs; have

repeatedly caused property of the plain-

tiffs to be seized in the Philippines;

have caused the arrest of an employee of

the plaintiff; that these actions were

solely for the purpose of harassing,

intimidating and threatening the plain-

tiffs and constitute an abuse of process;

that defendants Jensen and Tomacruz have

threatened and intimidated potential

customers of the plaintiffs by threatening

to join those customers in the vexatious

litigation and that the defendants Jensen

and Tomacruz have thereby deliberately

interfered with the contractual and

business relations of the plaintiffs and

their potential customers. Counts Two and

Three were dismissed by the court because

all of the acts alleged in those counts

occurred in the Philippines.

Count Four alleges that the defen-

dants Jensen, Tomacruz, Lear Phil, Jensen,

Tnc. and Hamix conspired to make unauthor-

ized use of the trademark and the name of

the plaintiffs, and that the use tends to

confuse the public into believing that the

defendant's business is in some way

connected with the business of the

plaintiffs.

The complaint prays for an order

restraining the defendants from continuing

the practice as set forth in the conm-

plaint, for damages and costs and attor-

ney's fees.

The defendants, James Jensen, Jr.,

Tomacruz, and Lear Phil have filed

counterclaim naming the plaintiffs and

B.S. Stillwell and Jane Doe Stillwell,

husband and wife, and Stillwell Aviation

Australia, Ltd., as additional parties in

the counterclaim. The counterclaim

contains six counts. Counts One through

Four allege a wrongful termination of the

distributorship agreement, wrongful

interference with the customers of the

counterclaimants, unjust enrichment, etc.

All of these acts alleged in the counter-

Claim apparently occurred in the Philip-

pines. Count Five involves a contract

between Hamix and GLC and GLEC for a Gates

Learjet Aircraft. It alleges a breach of

contract by GLC and GLEC. Count Six

alleges that the counterdefendants, acting

through various agents and employees, have

informec customers of Lear Phil that Lear

Phil, Jensen and Tomacruz were not

honorable, honest and qualified to market

Learjet aircraft. It alleges that this

was done maliciously anc prays for

compensatory and punitive damages for the

libel and Slander. These acts also

appeared to have occurred in the Philip-

pines.

The defendants have asked that the

court dismiss the plaintiff's complaint

and all of the counterclaimant's claims

against the counterdefendants, with the

exception of Count Five of the counter-

Claim. The motion to dismiss is based on

forum non conveniens.

The defendants, in their motion,

asked that the action be dismissed on the

following conditions:

1. That the courts of the Republic

of the Philippines have and/or will assert

jurisdiction to adjudicate the claims

alleged in the actions being dismissed;

2. That the defendants consent to

submit themselves to the personal juris-

diction of the appropriate courts of the

Republic of the Philippines;

3e That the defendants make their

employees available as witnesses to

testify in the Republic of the Philip-

pines;

4. That the defendants waive any

statute of limitations defenses which

might have arisen during the pendency of

the actions in this court;

5. That the defendants recognize any

judgment rendered by the appropriate court

of the Republic of the Philippines.

6. That depositions and documents

produced so far in this action and answers

to interrogatories may be used in the

Philippines action, subject to objections

which covld be made to those products of

Giscovery in this court. Defendants ask

that the court retain jurisdiction of

Count Five, (the contract for sale of a

jet aircraft between Hamix and GLC and

GLEC). This count is entirely unrelated

to the other counts of the complaint and

the counterclaim.

At the outset of any forum non

conveniens inquiry, the court must

determine whether there exists an alterna~-

tive forum. Ordinarily, this requirement

must be satisfied when the defendant is

"amenable to process” in the other

jurisdiction. Gulf Oi] Corporation

v. Gilbert, 67 S.Ct. 839 (1947). Plain-

tiffs, in their opposition to the motion,

do not question that there is an alterna-

tive forum. The defendants are willing to

Submit themselves to the jurisdiction of

the appropriate court of the Philippines

and recognize any judgment rendered by

such a court. They further consent to

make their employees available as wit-

nesses to testify in any action ina

Philippines court.

Plaintiffs refer to the presently

existing unstable situation in the

Philippines and contend that a court

should not send American plaintiffs to

litigate disputes ina forum where there

is a serious question as to the type of

justice they would receive. They also

allege that there are grave doubts as to

the safety of American witnesses, attor-

neys, etc.

a tl i a Te 1 el ee

———E

Any dismissal by this court would be

a conditional dismissal. If the plain-

tiffs, later on in the litigation, feel

that because of the political unrest in

the Philippines they are being deprived of

a fair trial they can ask this court to

set aside the conditional dismissal and

take jurisdiction of the claims.

The Supreme Court has set out a

balancing test to be used by district

courts in deciding whether or not an

action should be dismissec on the ground

of forum non conveniens, Gilbert, supra;

Koster v. Lumbermen's Mut. Cas, Co,., 67

S.Ct 828 (1947). In those decisions, the

Supreme Court stated that a plaintiff's

choice of forum should rarely be dis-

turbed. However, when an alternative

forum has jurisdiction to hear the case,

and when trial in the chosen forum would

"establish » « « Oppressiveness and

ee ee ee eae

vexation to a defendant out of all

proportion to the plaintiff's conven-

ience," or when the "chosen forum (is)

inappropriate because of considerations

affecting the court's own administrative

and legal problems," the court may, in the

exercise of its sound discretion, dismiss

the case. Piper Aircraft _Co,_v.,_Reyno,

102 S.Ct. 252 (1981). To guide the trial

court's discretion, the Court provided a

list of "private interest factors”

affecting the convenience of the liti-

gants, and a list of "public interest

factors" affecting the convenience of the

forum. The factors pertaining to the

private interest of the litigants included

the "relative ease of access to sources of

proof, availability of compulsory process

for attendance of unwilling witnesses, the

cost of obtaining attendance of willing

witnesses, possibility of viewing the

premises, if view would be appropriate to

the action, and all other practical

problems that make trial of a case easy,

expeditious, and inexpensive.

The "public interest factors”

included the administrative difficulties

flowing from the court's congestion; the

"local interest in having localized

controversies decided at home"; the

interest in having the trial of a diver-

Sity case in a forum that is at home with

the problems and conflicts of law, or in

the application of foreign law; and the

unfairness of burdening citizens in an

unrelated forum with jury duty. Id. at

258, n.6.

As pointed out above, the plaintiffs

allege that defendants Lear Phil, Tomacruz

and Jensen filed two civil suits and one

Criminal suit in the Philippines. In

Civil case No. 43874, Lear Phil is the

plaintiff, GLC and GLEC are the defen-

dants.

The complaint was filed on December

1, 1981. The plaintiffs filed their

action in the District of Arizona on

February 3, 1982.

A review of the pleadings in Cause

No. 43874 reveals that it involves the

alleged wrongful termination of the

distributorship, interference with

customers, unjust enrichment of the prior

efforts of Lear Phil in promoting GLC

products in the Philippines, and damages

to reputations.

These are the same allegations of the

counterclaim filed in the Arizona action

[except for the Hamix Court].

GLC and GLEC have filed an answer and

counterclaims in the Philippine action.

The counterclaim also concerns the

termination of the distributorship.

se eril

The record reflects another action

filed on January 18, 1981 in the Philip-

pines in which Tomacruz and Jensen,

Jr. are plaintiffs anc B.S. Stillwell,

John Benson, Michael Fahey, GLC and GLEC

are defendants. This action also deals

with the same subject matter as the

counterclaims in the Arizona action.

A review of the record in the Arizona

action and the pleadings in the pending

Philippine actions makes it abundantly

Clear that the vast majority of the

witnesses reside in the Philippines and

almost all of the acts alleged in the

complaints and counterclaims occurred in

the Philippines.

The factors pertaining to the private

interests of the litigants weigh heavily

in favor of dismissing the action on the

grounds of forum non-conveniens.

This is especially true when there is

pending litigation in the foreign forum

which was filed before the plaintiffs

filed their complaint in Arizona.

The public interest factors also

weigh heavily in favor of a dismissal.

Counsel have indicated that there are

hundreds, if not thousands, of exhibits

involved. There will be many witnesses

testifying for both sides. The case will

take weeks to try.

The Tucson division of the District

of Arizona is presently operating with two

district judges. Normally there are three

judges in the division. The two judges

are handling all the criminal calendar.

Outside judges have been assigned to

handle part vf the civil calendar and it

is contemplated that more help will be

necessary in the future.

It would be unfair to burden citizens

with extended jury duty when this district

has such a minor connection with the

controversies.

Because most of the operating facts

occurred in the Philippines, that country

has a substantial interest in the outcome

of the litigation.

Aside from the political unrest,

plaintiffs do not contend that Philippine

law will be less favorable.

The controversies will require the

application of Arizona law and Philippine

law. There is no reason to believe that

this court is better equipped to apply

Philippine law than a Philippine court

applying Arizona law.

The court finds that trial in this

Gistrict would impose a heavy burden on

the parties and the court.

After considering all of the factors

relating to public and private interests,

the court is convinced the motion to

dismiss should be granted.

IT IS ORDERED:

1. That the plaintiffs' Complaint is

dismissed on the following conditions.

(a) That the courts of the

Philippines accept jurisdiction to

adjudicate the plaintiffs' claims.

(b) That the defendants submit

to the jurisdiction of the appropri-

ate court in the Philippines.

their employees available for process

and as witnesses in the Philippines.

(d) That defendants waive any

statute of limitations defenses

which might have arisen during the

pendency of the actions in this

court.

Ae i ge

(e) That defendants recognize

any judgment rendered by a court in

the Philippines.

(f£) All discovery and the

products may be used in any action in

the Philippines - subject to objec-

tions which could be made in this

court.

- The defendants' counterclaims,

except for the Hamix count, are dismissed.

The complaint and the counterclaims

are all interrelated. Resolution of the

plaintiffs' claims would, in effect,

resolve the defendants' counterclaims.

If, for some unforeseen reason the

counterclaims cannot be resolved in the

Philippine litigation, this court will

entertain a motion by the defendants to

reinstate the counterclaims that this

court has jurisdiction to hear.

The court has pending two motions for

attorneys' fees.

IT IS ORDERED:

Le The plaintiffs' Motion for

Attorney's Fees re: Motion to Strike

GLC/GLEC's Answer to Counterclaim is

denied.

y The previous order awarding

plaintiffs' attorney's fees in the sum of

$500 is re-affirmed.

In view of the court's ruling on the

Motion to Dismiss for forum non _ con-

veniens, there is no need for the court to

rule on any other pending motions.

Dated this lst day of November, 1983.

mm aa aaa eae ee

ALFREDO C. MARQUEZ

United States District Judge

Copies mailed this date to:

GARY F. HOWARD

MOLLOY, JONES, DONAHUE, TRACHTA, CHILDERS

& MALLAMO, P.C.

Arizona Bank Plaza

P.O. Box 2268

Tucson, Arizona 85702

Attorneys for Defendants/Counterclaimants

WILLIAM H. TINNEY

BILBY, SHOENHAIR, WARNOCK & DOLPH, P.C.

P.O. Box 871

Tucson, Arizona 85702

Attorneys for Plaintiffs/Counterdefendants

UNITED STATES COURT OF APPEALS

POR THE NINTH CIRCUIT

GATES LEARJET CORPORATION

and GATES LEARJET EXPORT

CORPORATION,

Plaintiffs-Appellants, No. 83-2643

vs. OPINION

)

JAMES B. JENSEN, JR.; )

RICARDO S. TOMACRUZ; )

LEARJET PHILIPPINES, INC., )

a corporation; JAMES B. )

JENSEN & CO., INC., a )

corporation, and HAMIX )

INTERNATIONAL, LTD., a )

corporation, )

)

Defendants-Appellees.

William H. Tinney, Michael J. Rusing,

Bilby, Shoenhair, Warnock & Dolph,

Tucson, Ariz., for plaintiffs-appellants.

D. Michael Mandig, John F. Molloy,

Molloy, Jones, Donahue, Trachta, Childers

& Mallamo, P.C., Tucson, Ariz., for defen-

dants-appellees.

Appeal from the United States

District Court for the District of

Arizona.

Before CHOY, PREGERSON and REINHARDT,

Circuit Judges.

APPENDIX 4

CHOY, Circuit Judge:

The issues on this appeal are (1)

whether the district court properly

dismissed counts two and three of appel-

lant's complaint for lack of personal

jurisdiction, and (2) whether the district

court's dismissal of counts one and four

for forum non conveniens was an abuse of

Giscretion. On both issues, we reverse

and remand to the district court.

I. BACKGROUND

Gates Learjet Corporation and Gates

Learjet Export Corporation ("Gates")

entered into an international distribu-

torship agreement with Learjet Philip-

pines, Inc. ("LPI") in 1978. Gates,

principally located in Tucson, Arizona,

manufactures executive aircraft known as

Learjets. LPI is a Philippine corpora-

tion. The original agreement was for a

period of one year but was renewed for an

additional two years and four months.

James B. Jensen, Jr., a United States

citizen with residence in California and

the Philippines, is the president of LPI

and James B. Jensen & Co. ("Jensen,

Inc."), a California corporation located

in San Francisco. The negotiations for

the international distributorship agree-

ment occurred both in Tucson, when Jensen

visited Gates, and by telephone, corres-

pondence, and telex from Tucson to Manila

and San Francisco. The agreement provides

that it "is an Arizona agreement and that

it shall be governed by the laws of the

State of Arizona of the United States of

America in all matters, included but not

limited to, validity, obligation, inter-

pretation, construction, performance and

termination."

During the time the agreement was in

effect, Jensen and Ricardo S. Tomacruz,

the vice-president and general manager of

LPI and a citizen and resident of the

Philippines, made several trips to Tucson

on behalf of LPI. The purposes of

Jensen's visits, which numbered at least

seven between February 1978 and September

1981, included arrangement of an aircraft

Sale, meetings with Gates’ employees, and

attendance at Gates’ international distri-

butor conference and the delivery of

several airplanes. LPI also entered into

several airplane purchase agreements with

Gates in Tucson. Each agreement contained

a choice of law provision specifying

Arizona and a choice of forum provision

that the “courts of Arizona shall have

exclusive jurisdiction to hear and

determine all claims, disputes, actions,

Or suits which may arise hereunder." In

addition, LPI and Jensen, Inc. purchased

over $200,000 in spare parts from Gates.

ee ee ee ee eee

In 1981, Gates did not renew the

international Gistributorship agreement

with LPI. On February 3, 1982, Gates

filed a four-count complaint in an Arizona

state court against Jensen, Tomacruz, LPI,

Jensen, Inc., and Hamix International

Ltd., a Hong Kong corporation ("defen-

dants"). Count one of the complaint

alleges unauthorized use of Gates'

tradenames and trademarks. Count two

alleges abuse of process arising out

of the seizure by Philippine authorities

of a Gates' aircraft and the jailing of

its pilot. Count three alleges interfer-

ence with contractual relations between

Gates and customers in the Philippines.

Count four alleges a conspiracy to make

unauthorized use of Gates' tradename and

trademark. The action was removed to a

federal district court for diversity of

citizenship.

On September 23, 1982, the United

States District Court for the District of

Arizona dismissed counts two and three for

lack of personal jurisdiction as to one of

the defendants, Jensen, Inc. Gates

Learjet Corp. v. Jensen, No. CIV 82-139

(D.Ariz. Sept. 23, 1982) (Gates Learjet

I). After this partial dismissal, the

defendants answered the complaint and

filed a six-count counterclaim. The

counterclaim alleges improper termination

of the distributorship agreement, unjust

enrichment, interference with contractual

relations, and defamation. It added three

parties to th, litigation: B.S. Still-

well, Jane Doe Stillwell, and Stillwell

Aviation Australia Party, Ltd. On May 3l,

1983, the district court clarified its

earlier dismissal order and dismissed

counts two and three as _ to all of the

defendants.

| On October 5, 1983, after 18 months

of trial preparation, the defendants

challenged the convenience of the forum.

The defendants allege that two civil

actions pending in Philippine courts make

the same allegations as the action brought

by Gates in Arizona. On November 1, 1983,

the district court conditionally dismissed

counts one and four of the complaint under

the doctrine of forum non conveniens. The

court dismissed Gates" complaint on the

following conditions: 1) The Philippine

courts accept jurisdiction; 2) the

defendants submit to that jurisdiction;

3) the defendants make their employees

available for process and as witnesses;

4) the defendants waive any newly arisen

Statute of limitations defenses; 5) the

defendants recognize any Philippine court

judgment; and 6) all discovery and

products may be used in any action in the

Philippines, subject to objections which

could be made in this court. Gates

Learjet Corp. v. Jensen, No. CIV 82-139,

Slip op. at 1l (D.Ariz. Nov. 1, 1983)

(Gates Learjet II ).

II. DISCUSSION

A. Personal Jurisdiction

(1) The district court dismissed counts

two and three of Gates' complaint for lack

of personal jurisdiction. As the party

seeking to invoke the jurisdiction of the

court, Gates has the burden of establish-

ing personal jurisdiction. Data Disc,

Inc. v. Systems Technology Associates,

Inc., 557 F.2d 1280, 1285 (9th Cir.1977).-

1 Arizona's long-arm statute estab-

1 Gates contends that the defen-

dants waived any objection to personal

jurisdiction when they invoked the

jurisdiction of this court by asking for

affirmative relief in a permissive

counterclaim. The courts are divided on

the issue of whether the assertion of

a permissive counterclaim should consti-

tute a waiver of a jurisdictional defense.

Compare North Branch Products, Inc. v.

Pisher, 284 F.2d 611, 615 (D.C.Cir.1960)

(waiver) and Merz v. Hemmerle, 90 F.R.D.

566, 569 (E.D.N.Y.1981) (waiver) with

Neifeld v. Steinberg, 438 F.2d 423, 427

(3d Cir..971) (no waiver) and Lomanco,

Inc. v. Missouri Pacific Railroad Co., 566

F.Supp. 846, 851 (E.D.Ark.1983) (no

waiver). See generally Annot., 17

A.L.R.Fed. 390 (1973). Although this

court has held that the defendant's

assertion of a compulsory counterclaim

"does not constitute a waiver of any

jurisdictional defense he previously or

concurrently asserts,” Dragor eo the

Corp. v. Union Tank Car Co., 378 F.2d 241,

244 (9th Cir.1967), we have not decided

whether the assertion of a _ permissive

counterclaim constitutes a waiver. AS

to defendant Jensen, Inc., this case is

easily resolved because Jensen, Inc.

brought a motion to dismiss for lack of

personal jurisdiction prior to the filing

of the answer and counterclaim. See

Neifeld v. Steinberg, 438 F.2d at 428 n.

10 (clearly no waiver when jurisdictional

defenses raised by motion prior to filing

of answer). The other defendants, however,

did not raise the jurisdictional defense

until they filed their answer and counter

Claim. Nevertheless, we hold that the

filing of a permissive counterclaim does

not constitute a waiver of a personal

jurisdiction defense asserted in the same

pleading. Rule 12(b) of the Federal Rules

of Civil Procedure implicitly authorizes a

defendant to join a jurisdictional defense

with a counterclaim without waiving this

defense. The rule permits a defendant to

raise jurisdictional defenses by motion or

by answer. If we were to find a waiver

when a defendant files a permissive

counterclaim in the same pleading in which

he asserts jurisdictional defenses, the

purposes behind Rule 12(b)--to avoid the

delay caused by successive motions and

pleadings and to reverse the prior

practice of asserting jurisdictional

Gefenses by “special appearances"-- would

lishes personal jurisdiction over non-

residents to the maximum extent permitted

by due process, Houghton v. Piper

Aircraft Corp., 112 Ariz. 365, 542

P.2d 24, 26 (1975). Due process requires

the defendants to have certain minimum

contacts with the forum so that mainten-

ance of the suit does not offend tradi-

tional notions of fair play and substan-

tial justice. International Shoe Co. v.

Washington, 326 U.S. 310, 316, 66 S.Ct.

154, 158, 90 L.Ed. 95 (1945); Colonial

Leasing Co. v. Pugh Brothers Garage, 735

F.2d 380, 383 (9th Cir.1984). To satisfy

this due process requirement, Gates may

prove “general jurisdiction" or “limited

be thwarted. See Neifeld v. Steinberg, 438

F.2d at 429. Moreover, courts have noted

that when the rule makers wanted to attach

"waiver" consequences in certain situa-

tions, they did so explicitly. See id. at

428 & n. 1l; Lomanco, Inc. v. Missouri

Pacific Railroad Co., 566 F.Supp. at 850.

jurisdiction."

1. General Jurisdiction

(2) A sufficient relationship between

the defendants and Arizona exists to

Support general jurisdiction if Gates can

demonstrate that the defendants' activi-

ties within Arizona are "substantial" or

"continuous and systematic." See Data

Disc, Inc. v. Systems Technology Associ-

ates, Inc., 557 F.2d at 1287. We review

the district court's holding that Jensen

"does not transact business within Arizona

On a continuous or systematic basis, and

does not provide the kind of contacts that

would sustain exercise of general

jurisdiction." Gates Learjet I, slip op.

at 7.

Gates cites five activities to prove

that defendants' contacts with Arizona

were “continuous and systematic” and

"substantial": 1) Jensen solicited the

distributorship agreement in Arizona; 2)

the defendants visited Tucson a number of

times; 3) the airplane purchase agree-

ments between Gates and Jensen contained

an Arizona choice of law and forum

provision; 4) the defendants purchased

Spare parts from Gates in Tucson; and 5)

the defendants sent many letters and

telexes and made numerous’ telephone calls

to Tucson.

(3)(4) We must decide whether these

contacts constitute sufficient activity in

Arizona to conclude that the defendants

"may in fact be said already to be

"present' there.” Wells Fargo & Co. v.

Wells Fargo Express Co., 556 F.2d 406,

413 (9th Cir.1977). Moreover, we must

focus upon the "economic reality” of the

defendants' activities rather than a

mechanical checklist. See Thos. P.

Gonzalez Corp. v. Consejo Nacional, 614

P.2d 1247, 1254 (9th Cir.1980) (quoting

Poster Vv. Mooney Aircraft Corp., 68

Cal.App.3d 887, 137 Cal.Rptr. 694, 697

(1977)).

(5)(6)(7)(8) We conclude that the

"economic reality" here is that defen-

dants' activities in Arizona were not

“continuous and systematic" or “substan-

tial". Jensen's solicitation of the

distributorship agreement in Arizona and

the defendants' visits to Tucso:i do not

constitute "conducting business" in

Arizona. See Rocke v. Canadian Automobile

Sport Club, 660 F.2d 395, 399 (9th

Cir.1981). Making telephone calls and

sending telexes and letters to Tucson are

not activities which support a finding

of general jurisdiction. See Thos. P.

Gonzalez Corp. v. Consejo Nacional, 614

F.2d at 1254. Furthermore, the choice of

forum provision in the airplane purchase

agreement applies only to disputes arising

out of those agreements. Significantly,

the defendants did not establish a regular

Place of business in Arizona. See Rocke

Vv. Canadian Automobile Sport Club, 660

P.2d at 399. These contacts in their

totality do not demonstrate sufficient

activity in Arizona to support general

jurisdiction. Defendants’ activities in

Arizona were more occasional than contin-

uous, and more infrequent than systematic.

2. Limited Jurisdiction

(9) If a defendant's activities are

not so pervasive to subject them to

general jurisdiction, this court makes the

following evaluation in determining

whether there is limited jurisdiction:

(1) The nonresident defendant

must do some act or consummate some

transaction with the forum or perform some

act by which he purposely avails himself

of the privilege of conducting activities

in the forum, thereby invoking the

benefits and protections of its laws.

(2) The claim must be one which

arises out of or results from the defen-

dant's forum-related activities.

(3) Exercise of jurisdiction

must be reasonable.

Data Disc, Inc. v. Systems Technology

Associates, Inc., 557 F.2d 1280, 1287 (9th

Cir.1977).

(10) Gates Clearly satisfies the

first prong of this test. Not only did

Jensen solicit the distributorship

agreement in Arizona, but also the agree-

ment specifically provides that Arizona

law governs it. The distributorship

agreement, therefore, directly invokes the

benefits and protections of Arizona laws.

See O'Hare International Bank v. Hampton,

437 F.2d 1173, 1177 (7th Cir.1971);

Alchemie International, Inc. v. Metal

World, Inc., 523 F.Supp. 1039, 1054

(D.N.J.1981). Given these circumstances,

Jensen should have reasonably anticipated

"being haled into court” in Arizona. See

World-Wide Volkswagen Corp. v. Woodson,

444 U.S. 286, 297, 100 S.Ct. 559, 567, 62

L.Ed.2d 490 (1980).

Prong two of the Data Disc inquiry

requires that each claim "arises out of or

results from" the defendants' forum

related activity. 557 F.2d at 1287. The

district court had the most trouble with

this part of the test, stating:

The claims of counts two and

three, sounding in tort law,

cannot be said to arise out of

the distributorship agreement.

These claims result from the

conduct of defendant outside the

state, and are too attenuated a

contact to justify exercise of

personal jurisdiction.

Gates Learjet I, slip op. at 10.

After examining the record, we

conclude that the district court

erred in finding that the claims

in counts two and three wie *'tvu

attenuated a contact” to justify

the exercise of personal

jurisdiction.

(11) Count two of Gates' complaint

alleges that the defendants filed two

civil actions and one criminal complaint

in the Philippines which caused the

seizure of one of Gates‘ Learjets and the

arrest of one of its employees. Count two

alleges further that these actions were

meant to harass, intimidate and threaten

Gates and constitute an abuse of process.

At first blush, this count may appear

to be unrelated to the distributorship

agreement. An examination of the com-

plaint that the defendants filed in

the Philippines on December 1, 1981,

however, dispels any doubt that this count

"arises out of" the distributorship

agreement.

The first cause of action in the

Philippines complaint alleges that Gates'

nonrenewal of the distributorship agree-

ment with the defendants was "clearly

contrary to law, morals, good customs,

Public policy and public order." The

second cause of action alleges "moral" and

reputation damages for Gates' bad faith in

refusing to renew the distributorship

agreement. The third cause of action

alleges wanton and fraudulent behavior in

refusing to negotiate the renewal of the

Gistributorship agreement. Thus, count

two of Gates' complaint arose out of the

distributorship agreement because its

termination induced defendants' alieged

harassment and intimidation of Gates.

Count two was not too attenuated from the

Gistributorship agreement to support a

finding of limited jurisdiction.

(12) We similarly conclude that count

three of Gates' complaint satisfies the

second prong of the Data Disc test. Count

three alleges that the defendants inter-

fered with Gates' contractual relations

with its customers in the Philippines.

This count also arises out of the distri-

butorship agreement because its factual

basis concerns whether Jensen improperly

used Gates' tradenames contrary to the

terms of the distributorship agreement.2

The third and final prong of the Data

Disc inquiry requires a court's exercise

2 Gates cites cases that inter-

pret an Arizona attorney's fee statute and

hold that tort claims arise out of a

contract if they could not exist “but for"

the contract. See, e.g., Sparks v.

Republic National Life Insurance Co., 132

Ariz. 529, 544, 647 P.2d 1127, 1141

(1982), cert. denied, 459 U.S. 1070, 103

S.Ct. 490, 74 L.Ed.2d 632. Although these

cases interpret the "arises out of"

language in a manner that supports Gates'

construction, Gates never demonstrates why

this court, in applying a constitutional

due process test, should adopt an Arizona

court's interpretation of an irrelevant

state statute.

of jurisdiction to be reasonable. 557

F.2d at 1287. This court has identified

seven factors as pertinent to the reason-

ableness inquiry:

(A) the extent of the defen-

dant's purposeful interjection into the

forum state;

(B) the burden of defending in

the forum state; (C) the extent of the

conflict with the sovereignty of the

Gefendant's state;

(D) the forum state's interest

in adjudicating the dispute;

(E) the most efficient judicial

resolution of the controversy;

(F) the importance of the forum

to the plaintiff's interest in convenient

and effective relief; and

(G) the existence of an alterna-

tive forum.

Rocke v. Canadian Automobile Sport

Club, 660 F.2d 395, 399 (9th Cir.1981);

see Insurance Co. of North America v.

Marina Salina Cruz, 649 F.2d 1266, 1270

(9th Cir.1981). "These factors are not

mandatory tests, each of which plaintiff

must pass in order for a court properly to

assume jurisdiction. Instead, the factors

illuminate the considerations of fairness

and due process set forth in International

Shoe, 326 U.S. at 310 (66 S.Ct. at 154)."

Hedrick v. Daiko Shoji Co., Ltd., Osaka,

715 F.2d 1355, 1359 (9th Cir.1983).

The application of these factors to

this case convinces us that it would be

reasonable to subject the defendants to

the jurisdiction of the Arizona court.

We consider each of the factors in turn.

(13) Although not extensive enough to

support general jurisdiction, the contacts

of LPI, Jensen, and Tomacruz with Arizona

are sufficient to demonstrate a purposeful

interjection into the forum state. Jensen

solicited an international distributorship

agreement in Tucson, which contained a

choice of law provision specifying

Arizona. Both Jensen and Tomacruz made

several visits to the Gates' facilities

and even accepted delivery of airplanes in

Tucson. Moreover, these airplane purchase

agreements contained choice of law and

forum provisions, both of which specified

Arizona. Thus, the terms of important

contracts between Gates and the defendants

demonstrate that the defendants had notice

that they might be brought into a court in

Arizona.

(14) The burden on the defendants of

defending in Arizona, as opposed to the

Philippines, is potentially significant.

Litigating abroad imposes significant

inconveniences upon the party appearing

in a foreign country. Olsen By Sheldon

v. Mexico, 729 F.2d 641, 650 (9th-

Cir.1984). We nevertheless conclude that

the burden on the defendants would not be

substantial here, primarily because the

defendants must litigate in Arizona

anyway. The district court found personal

jurisdiction as to counts one and four.

The extra burden of defending counts two

and three in Arizona, particularly in

light of their connection to counts one

and four, would be minimal.

(15) (16) The reasonableness of

jurisdiction depends also in part upon the

seriousness of the potential affront to

the sovereignty of the defendants' state.

A foreign nation presents a higher

sovereignty barrier than that between two

states within our union. Insurance Co. of

North America v. Marina Salina Cruz, 649

P.2d at 1272. Two of the three defendants

named in counts two and three are resi-

dents of the Philippines. The government

of the Philippines clearly has an interest

in resolving disputes that involve its

citizens. Nevertheless, we hote that this

factor is not dispositive because, if

given controlling weight, it would always

prevent suit against a foreign national in

a United States court.

(17) We examine next Arizona's

interest in adjudicating this dispute.

Arizona has a strong interest in ensuring

that its citizens are fully compensated

for their injuries, in part to protect the

state's economic resources from unneces-

Sary expenditures. See Olsen By Sheldon

v. Mexico, 729 F.2d at 651.

(18) At the current stage of the

litigation, Arizona would aPfear to be the

more efficient forum to resolve this

dispute. Gates alleges, and gefendants do

not dispute, that discovery is completed

and "this matter could be tried in a

matter of weeks." In addition, although

parts of counts two and three may require

the application of Philippine law, the

proof of both counts may also involve the

application of Arizona law. For example,

Gates may attempt to prove the unreason-

ableness of defendants' alleged actions in

count two, in part, by demonstrating that

Gates properly terminated the distributor-

ship agreement, which proof would require

the application of Arizona law. The

district court in Arizona is’ the more

efficient forum to resolve such interpre-

tations of Arizona law. See Hedrick v.

Daiko Shoji Co., Ltd., Osaka, 715 F.2d at

1359; Raffaele v. Compagnie Generale

Maritime, 707 F.2d 395, 399 (9th Cir.-

1983); Insurance Co. of North America v.

Marina Salina Cruz, 649 F.2d at 1273.3

(19) An Arizona court certainly

provides Gates with the most convenient

forum for seeking relief. Unlike the

individual plaintiff in Raffaele v.

Compagnie Generale Maritime, 707 F.2d at

399, both parties here involve corporate

entities apparently with sufficient

resources to defend in either country. We

therefore give some, but not significant,

weight to this factor.

(20) The final factor we consider is

the availability of an alternative forum.

Gates alleges that it may not receive a

fair trial in the Philippines because of

the “well publicized violent upheavals"

3 The Philippines, of course, may

be the more efficient forum to apply

possible Philippine law questions.

Nevertheless, we conclude that Arizona is

the more efficient forum because the

action is almost ready for trial in

Arizona.

there. We note that the “appellants must

Carry the burden of proving the unavail-

ability of an alternative forum." Olsen

By Sheldon v. Mexico, 729 F.2d at 651. We

cannot say that Gates has satisfied this

burden. In light of the other factors,

however, this factor is not dispositive.

(22) After considering all the

relevant actors, we conclude that, on

balance, the exercise of limited personal

jurisdiction over the defendants by a

federal district court in Arizona is

reasonable. The defendants' numerous

visits to Tucson and Jensen's solicitation

of the distributorship agreement there

Gemonstrate a purposeful interjection into

the state of Arizona. Moreover, defending

counts two and three would not burden

defendants significantly because they must

litigate counts one and four in Arizona

anyway. We place some, but not substan-

tial, weight on the convenience to Gates

of litigating this dispute in Arizona.

Pinally, Arizona has an interest in

adjudicating this dispute and, at this

stage of the litigation, it is the more

efficient forum.

In weighing these factors, we are not

convinced that adjudication oof this

dispute in Arizona will affront the

sovereignty of the Philippines. Although

the availability of an alternative forum

Supports the defendants' position, the

Other factors weigh more strongly in

Gates' favor. The district court in its

order did ngt weigh these factors, nor did

it examine whether the exercise of

personal jurisdiction would be reasonable.

Under the Data Disc three-prong inquiry,

therefore, the district court erred in

dismissing counts two and three for lack

of personal jurisdiction.

B. Forum Non Conveniens

On November 1, 1983, the district

court conditionally dismissed Gates'

complaint under the doctrine of forum non

conveniens. Because the district court

had dismissed counts two and three

for lack of personal jurisdiction one

year earlier, this dismissal pertained

only to counts one and four, which allege

unauthorized use of Gates" tradenames and

trademarks. The dismissal would require

Gates to pursue relief in the Philippine

courts.

Whether an action may be dismissed

for forum non conveniens when jurisdiction

is otherwise properly invoked is governed

by the factors outlined in Gulf Oil Corp.

v. Gilbert, 330 U.S. 501, 508-09, 67

S.Ct. 839, 843, 91 L.Ed. 1055 (1947). The

Court divided these factors into "private

interest" and “public interest" factors,

each of which must be weighed by the

district court. As this court has noted:

The private interest factors

include “the relative ease of

access to sources of proof;

availability of compulsory

process for attendance of \

unwilling, and the cost of

obtaining attendance of willing,

witnesses; possibility of view

of premises, if view would be

appropriate to the action; and

all other practical problems

that make trial of a case easy,

expeditious and inexpensive."

The public interest factors include the

administrative difficulties flowing from

court congestion; the local interest

in having localized controversies resolved

at home; the interest in having the trial

of a diversity case ina forum that is

familiar with the law that just govern the

action; the avoidance of unnecessary

problems in conflicts of law, or in

application of foreign law; and the

unfairness of burdening citizens in an

unrelated forum with jury duty.

Cheng v. Boeing Co., 708 F.2d 1406,

1409-10 (9th Cir.1983) (citations omit-

ted), cert. denied, --- U.S. ----, 104

S.Ct. 549, 78 L.Ed.2d 723 (1983).

(22) If a district court properly

analyzes and considers all relevant

factors and its balancing of these factors

is reasonable, its forum non conveniens

dismissal "may be reversed only when there

has been a clear abuse of discretion.”

Piper Aircraft Co. v. Reyno, 454 U.S. 235,

257, 102 S.Ct. 252, 266, 70 L.Ed.2d 419

(1981). A district court, therefore,

abuses its discretion when it fails to

balance the relevant factors. La Seguri-

dad v. Transytur Line, 707 F.2d 1304, 1308

(llth Cir.1983). "Emphasis on the

district court's discretion ... must not

overshadow the central principle of the

Gilbert doctrine that ‘unless’ the balance

is strongly in favor of the defendant, the

plaintiff's choice of forum should rarely

be disturbed." " Manu International,

S.A. v. Avon Products, Inc., 641 F.2d 62,

65 (2d Cir.1981) (quoting Gulf Oil Co. v.

Gilbert, 330 U.S. at 508, 67 S.Ct. at

843).

We conclude that the district court

did not balance the important relevant

factors. The balance of the public and

private interest factors is not strongly

in favor of the defendants. We therefore

hold that the district court's dismissal

of counts one and four for forum non

conveniens was an abuse of discretion.

1. Private Interest Factors

(23) The district court failed to

examine at least two important and

relevant private interest factors. 4

Pirst, the district court did not recog-

nize or consider in its balancing that

Gates is a United States citizen and a

resident of Arizona. A United States

citizen has no absolute right to sue ina

United States court. Mizokami Brothers of

Arizona, Inc. v. Baychem Corp., 556 F.2d

4 The district court correctly

began its analysis with a determination

of whether there exists an alterna-

tive forum. See Piper Aircraft Co. v.

Reyno, 454 U.S. at 254 n. 22, 102 S.Ct. at

265 n. 22; Cheng v. Boeing Co.,

708 F.2d at 1410; Pain v. United Tech-

nologies Corp., 637 F.2d 775, 784

(D.C.Cir.1980), cert. denied, 454 U.S.

1128, 102 S.Ct. 980, 71 L.Ed.2d 116

(1981). The court noted that a defen-

dant's amenability to process in the

other jurisdiction ordinarily satis-

fies this requirement. See Gulf Oil Co.

v. Gilbert, 330 U.S. at 506-07, 67

S.Ct. at 842. We do not overturn the

district court's finding of an alternative

forum. That an alternative forum exists,

however, is not dispositive in the

balancing required in a forum non con-

veniens analysis.

975, 977 (9th Cir.1977) (per curiam),

cert. denied, 434 U.S. 1035, 98 S.Ct. 770,

54 L.Ed.2d 783 (1978). The Supreme

Court, however, has observed “that a

Plaintiff's choice of forum is entitled to

greater deference when the plaintiff has

chosen the home forum." Piper Aircraft

Co. v. Reyno, 454 U.S. at 255, 102 S.Ct.

at 265; see Koster v. Lumbermens Mutual

Co., 330 U.S. 518, 524, 67 S.Ct. 828, 832,

91 L.Ed. 1067 (1947); Paper Operations

Consultants International, Ltd. v. SS Hong

Kong Amber, 513 F.2d 667, 672 (9th

Cir.1975). Greater deference is due

because "a real showing of convenience by

a plaintiff who has sued in his home forum

will normally outweigh the inconvenience

the defendant may have shown.” Piper

Aircraft Co. v. Reyno, 454 U.S. at 255 n.

23, 102 S.Ct. at 266 n. 23 (quoting Koster

v. Lumbermens Mutual Co., 330 U.S. at 524,

67 S.Ct. at 832).

(24) The second relevant private

interest factor the district court failed

to examine is that the parties were ready

for trial when it dismissed the complaint

for forum non conveniens. The discovery

Geadline had passed; all documents needed

for trial had been exchanged and/or

identified; and all necessary trial

documents were located in Tucson, Arizona.

The central purpose of any forum non

conveniens inguiry is to ensure that the

trial is convenient. Piper Aircraft Co.

v. Reyno, 454 U.S. at 256, 102 S.Ct. at

266; La Seguridad v. Transytur Line, 707

P.2d at 1307. That trial preparation had

progressed nearly to the point of trial

certainly was a relevant factor when the

district court considered whether trial of

the case in Arizona would have been more

"easy, expeditious and inexpensive” than

trial in the Philippines. See Gulf Oil

Corp. v. Gilbert, 330 U.S. at 508, 67

S.Ct. at 843. Although no single factor

is dispositive, we conclude that the

Gistrict court's failure to weigh these

private interest factors was an abuse of

discretion.

(25) We also observe that the private

interest factors mentioned by the district

court do not strongly support the defen-

dants' position on forum non conveniens.

The district court noted that “the vast

majority of the witnesses reside in the

Philippines ...." Gates Learjet II, slip

op. at 9. The defendants, however, admit

that the district court was not absolutely

correct. In fact, 23 of the 44 witnesses,

whom the parties designated in response to

interrogatories, reside in the Philip-

pines, which is hardly a “vast majority."

Purthermore, the district court

improperly focused on the number of

witnesses in each location. Instead, the

court should have examined the materiality

and importance of the anticipated wit-

nesses' testimony and then determined

their accessibility and convenience to the

forum. See La Seguridad v. Transytur

Line, 707 F.2d at 1308-09; Thomson &

McKinnon v. Minyard, 291 F.Supp. 573, 576

(S.D.N.Y.1968). We also note that a

district court should keep in mind that

“the increased speed and ease of travel

and communication ... makes, especially

when a key issue is the location of

witnesses, no forum ‘as inconvenient

(today) as it was in 1947,' " when the

Supreme Court decided Gilbert. Manu

International, S.A. v. Avon Products,

Inc., 641 F.2d 62, 65 (2d Cir.1981). We

are not convinced that the court here

properly considered and weighed this

private interest factor. We therefore

Cannot give much deference to the district

court's consideration of it.5

2. Public Interest Factors

In its consideration of public

interest factors, the district court

concluded that the Philippines “has a

substantial interest in the outcome of the

litigation." \It reasoned that "most of

the operating facts occurred in the

5 In its discussion of private

interest factors, the district court

also noted that "almost all of the

acts alleged in the complaints and

counterclaims occurred in the Philip-

pines." This observation, however,

seems to pertain to the Philippines'

interest in the action, which is a

public interest factor. If the district

court was instead referring to the

convenience of obtaining certain evidence,

it failed to explain what evidence was

unavailable. As discussed above, most

trial materials were located in Arizona at

the time the district court dismissed

counts one and four for forum non con-

veniens.

Philippines,” and that "(t)he controver-

sies will require the application of

Arizona law and Philippine law." Gates

Learjet II, slip op. at 10. Public

interest factors properly considered

include "the local interest in having

localized controversies resolved at home,"

and "the interest in having the trial of a

diversity case in a forum that is familiar

with the law that must govern the action."

Cheng v. Boeing Co., 708 F.2d at 1410.

(26) We nevertheless conclude that

the district court's consideration of

these public interest factors rested on a

mistaken assumption about the applicable

law and improperly ignored the advantages

of an Arizona forum for the trial. In

noting that both Philippine and Arizona

law applied to this matter, the district

court apparently considered all four

counts of the Gates complaint. The

Gefendants' motion to dismiss for forum

non conveniens, however, could pertain

Only to counts one =nd four because the

court had already dismissed counts two and

three for lack of personal jurisdiction.

Counts one and four allege unauthor-

ized use and a conspiracy to make un-

authorized use of Gates' tradename and

trademark. These counts involve an

interpretation of the international

Gistributorship agreement entered into

between Gates and LPI. Under the heading,

"Post-Termination Actions,” the distribu-

torship agreement provides:

The Distributor shall immediate-

ly discontinue the use of any

trade names or trademarks

referred to in Article III

above and shall make no further

use of the same nor any other

name, title, expression or mark

s0 nearly resembling such trade

Mames or trademarks as_ to be

deceptive in nature.

The distributorship agreement also

specifically provides that it shall be

governed by Arizona law. Thus, counts one

and four apparently are contract actions

that require the application of Arizona

law, not Philippine law.6

(27) In addition to making a mistaken

assumption about the applicable law, the

district court failed to weigh Arizona's

interests in having the controversy

"resolved at home." Arizona has a

Significant interest in interpreting its

own laws. See Cheng v. Boeing Co., 708

F.2d at 1411. Arizona also has an

interest in protecting its companies from

trademark infringement abroad to preserve

the state's economic vitality. Although

the situs of the alleged trademark and

tradename infringement was the Philip-

pines, it appears that Philippine law is

not applicable. We therefore conclude

6 Defendants implicitly admit

this point, conceding that Arizona law

would apply to a contract action.

—————_

that these public interest factors should

not weigh heavily in defendants’ favor. A

proper understanding of the applicable law

and the relative interests, in fact,

suggests that Arizona has the more

substantial interest in this litigation.

(28) The district court particularly

emphasized one public interest factor:

the docket congestion of its court. It

stated:

Counsel have indicated that

there are hundreds, if not

thousands, of exhibits involved.

There will be many witnesses

testifying for both sides. The

case will take weeks to try.

The Tucson division of the

District of Arizona is presently

operating with two district

judges. Normally there are

three judges in the division.

The two judges are handling all

of the criminal calendar.

Outside judges have been

assigned to handle part of the

civil calendar and it is

contemplated that more help will

be necessary in the future.

Gates Learjet II, slip op. at

10.

This factor also should not weigh heavily

in defendants’ favor. The real

issue is not whether a dismissal will

reduce a court's congestion but whether a

trial may be speedier in another court

because of its less crowded docket. See

Starnes v. McGuire, 512 F.2d 918, 932

(D.C.Cir.1974) (en banc); 15 C. Wright,

A. Miller & E. Cooper, Federal Practice &

Procedure s 3854 at 289-91 (1976); see

also Foster v. Litton Industries, Inc.,

431 F.Supp. 86, 88 (S.D.N.Y¥.1977) (rela-

tive docket conditions accorded some, but

not decisive, weight in transfer motions).

The district court here observed only

that its docket was congested; it did not

determine whether a trial would be

speedier in the Philippines. Even if it

were, however, it is unfair for a court to

subject a United States corporation to the

courts of another country merely because

plaintiff's home country courts are

congested. The forum non conveniens

doctrine should not be used as a solution

to court congestion; other remedies, such

as placing reasonable limitations on the

amount of time each side may have to

present evidence, are more appropriate.

We hold that the district court failed to

consider relevant private and public

interest factors and misconstrued others.

The district court therefore abused its

discretion. On balance, we conclude

that the relevant private and public

interest factors support the district

court's retention of jurisdiction and the

dismissal of defendants ' forum non

conveniens motion.

III. CONCLUSION

Gates cannot demonstrate that the

Gefendants had sufficient activity in

ee, oe a%

Joahapis

Arizona to establish general jurisdiction.

Under the Data Disc three-prong inquiry

into limited jurisdiction, however, we

hold that the district court erred in

dismissing counts two and three for lack

of personal jurisdiction. As to the

district court's dismissal of counts one

and four for forum non conveniens, we find

an abuse of discretion. The district

court's orders are therefore

REVERSED AND THE CASE IS REMANDED.

[Dated September 27, 1984]

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

GATES LEARJET CORPORATION

and GATES LEARJET EXPORT

CORPORATION,

Plaintiffs-Appellants, No. 83-2643

District of

Arizona

vs.

)

JAMES B. JENSEN, JR.; )

RICARDO S. TOMACRUZ; ) ORDER

LEARJET PHILIPPINES, INC., )

a corporation; JAMES B. )

JENSEN & CO., INC., a )

corporation, and HAMIX )

INTERNATIONAL, LTD., a )

corporation, ;

)

Defendants~-Appellees.

Before: CHOY, PREGERSON, and REINHARDT,

Circuit Judges.

The panel as constituted in the

above case has voted to deny the petition

for rehearing and to reject the suggestion

for rehearing en banc.

The full court has been advised

.Of the suggestion for rehearing en banc

and no judge of the court has voted to

grant rehearing en banc. Fed.R.App.P.-

: 35 (b) *

APPENDIX 5

The petition for rehearing is

denied and the suggestion for rehearing en

banc is rejected.

[Dated November 27, 1984]

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.