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Prep Tours, Inc. v. American Youth Soccer Organization

United States Court of Appeals, First Circuit

January 8, 2019

PREP TOURS, INC., Plaintiff-Appellant,
AMERICAN YOUTH SOCCER ORGANIZATION; DOWNEY AYSO REGION 24; ARMANDO RODRÍGUEZ, in his capacity as Director and/or Officer and/or member of the Board of Directors of Downey AYSO Region 24; RAMÓN AGUILAR, in his capacity as Director and/or Officer and/or member of the Board of Directors of Downey AYSO Region 24; CARL JACKSON, in his capacity as Director and/or Officer and/or member of the Board of Directors of Downey AYSO Region 24; ALICIA RAMÍREZ, in her capacity as Director and/or Officer and/or member of the Board of Directors of Downey AYSO Region 24; JOHN DOE; RICHARD DOE; BOB DOE; INSURANCE COMPANY A; INSURANCE COMPANY B, Defendants-Appellees.


          Steven J. Torres, with whom Brooks L. Glahn, Torres Scammon Hincks & Day LLP, Darío Rivera-Carrasquillo, Giancarlo Font, and Rivera-Carrasquillo, Martínez & Font were on brief, for appellant.

          Alan P. Dagen, with whom The Law Offices of Seda & Alan P. Dagen, P.A., Luis A. Oliver-Fraticelli, and Adsuar Muñiz Goyco Pérez-Ochoa, P.S.C. were on brief, for appellees.

          Before Torruella, Lipez, and Barron, Circuit Judges.


         This appeal raises a now familiar issue: when do remote communications by email and telephone give rise to the kind of connection to a forum state or territory that justifies the exercise of personal jurisdiction in that forum over an out-of-forum defendant? The issue comes to us in this case via the diversity suit in the United States District of Puerto Rico that a Puerto Rico tour company brought against a California youth soccer organization and related defendants. The tour company alleges in this suit that the defendants, by first requesting that the tour company make an offer for a potential soccer trip to Puerto Rico for some of the organization's teams and their families but then declining after further communications to book the tour, breached duties that the organization owed to it under Puerto Rico contract and tort law. In response to the defendants' motion, the District Court dismissed both the contract and tort claims for lack of personal jurisdiction. We now affirm that order.


         American Youth Soccer Organization ("AYSO") is a nonprofit entity incorporated and headquartered in California.[1] The other defendants are Downey AYSO Region 24 ("Region 24") and four volunteers for Region 24.

         Region 24 is a regional chapter of AYSO from Downey, California. Region 24 is not a separate legal entity from AYSO.

         The four Region 24 volunteers served at all relevant times as, respectively, Region 24's commissioner (Armando Rodríguez), assistant commissioner (Ramón Aguilar), treasurer (Carl Jackson), and volunteer coordinator (Alicia Ramírez). All four individuals are residents of California.

         PREP TOURS, Inc. ("PREP Tours") is the plaintiff.[2] It is a Puerto Rico corporation that, according to the complaint, "specializes in student cultural immersion educational field trips" and is "dedicated to servicing and organizing educational soccer tours for student athletes and soccer clubs focusing on friendly soccer games in Puerto Rico."

         On Friday, November 2, 2012, Ramírez emailed PREP Tours from California to ask for a price quote and for what the company could "offer" regarding an all-inclusive trip to Puerto Rico for "[a]pproximately 60 players and their families." Ramírez informed the tour company in that email that Region 24 was also gathering information about alternative destinations, like Hawaii and Mexico.

         PREP Tours responded that very same Friday by sending via email a promotional brochure regarding the "unique soccer program" in the Puerto Rico cities of San Juan and Rincón that it offered visiting youth soccer teams. The tour company also emailed Ramírez, after the weekend, a proposed itinerary based on the San Juan and Rincón tour described in the brochure, which PREP Tours described as "a tentative rough draft." There followed, intermittently over the next four months, emails and telephone calls, as well as at least one text message, between the parties concerning the possible trip. During these ensuing communications, Ramírez informed PREP Tours that Region 24 was considering competing offers on a possible trip to Puerto Rico from three alternative travel agencies, at least one of which was not based in Puerto Rico.

         Before Region 24 made a decision about the trip, a travel agency in Florida, Hakuna Matata Group Tours, LLC, contacted Ramírez by email concerning possible flights. The complaint says that Hakuna Matata was "designated by PREP Tours" to handle the soccer teams' flight arrangements.

         Hakuna Matata later emailed Ramírez with information for wiring it money as a deposit on the airline flights. Region 24's treasurer, Jackson, thereafter emailed Hakuna Matata to say that he could wire transfer the money to Hakuna Matata's account the next day, January 25.

         Jackson did not wire the money. Ramírez did write PREP Tours on January 25, however, to say that the commissioner, assistant commissioner, and treasurer of Region 24 still had "to go through everything with a fine tooth-comb."

         The record references no further communications between any of the parties until the ones that were made on February 25, 2013. On that day, PREP Tours emailed Region 24's commissioner, assistant commissioner, and treasurer to follow up on the status of its offer.

         The commissioner, Rodríguez, responded that same day with an email telling PREP Tours that the assistant commissioner, Aguilar, was "still working on logistics." He then sent a later email that instructed PREP Tours to disregard this first email. Aguilar had responded in the interim by informing PREP Tours that "[a]fter reviewing all proposals from the 3 compan[ies] we decided to go with a local company."

         Just short of two years later, PREP Tours sued AYSO, Region 24, and the four volunteers in the United States District Court for the District of Puerto Rico, seeking a minimum of $640, 000 in damages. The complaint alleged that the defendants were liable under the Puerto Rico tort doctrine of culpa in contrahendo, "which requires parties to negotiate in good faith." Ysiem Corp. v. Commercial Net Lease Realty, Inc., 328 F.3d 20, 23 (1st Cir. 2003) (citation omitted). The complaint also alleged a breach-of-contract claim under Puerto Rico law. The complaint asserted that the contract was created by: (1) the email from Region 24's treasurer to Hakuna Matata in Florida, saying that he could wire money to that third-party travel agency in order to make a deposit on the airline flights; and (2) other "representations" made by the defendants. The complaint did not allege what the contract's terms were, but it did allege that the defendants were in breach of the contract.

         The defendants moved to dismiss PREP Tours's claims under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction, and the defendants submitted affidavits with their motion. An affidavit from AYSO's deputy executive director as well as affidavits from the individual defendants each averred that the "only contacts" that existed between the defendants and PREP Tours consisted of "the preliminary communications between some of [the Region 24] volunteers and the travel agency with whom they communicated in an effort to obtain pricing and information for a potential trip for some of [Region 24's] youth soccer teams."

         PREP Tours's brief in opposition to the defendants' motion to dismiss included a number of evidentiary submissions attached as exhibits. The submissions included copies of the communications exchanged between the parties during the relevant four-month period.

         Neither party requested an evidentiary hearing following the defendants' motion challenging personal jurisdiction, nor did the District Court conduct one. The District Court instead used what we have referred to as "the prima facie standard" to assess whether PREP Tours had met its burden to justify the exercise of personal jurisdiction in Puerto Rico over the defendants. Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 675-76 (1st Cir. 1992) (emphasis omitted); see also A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016) (explaining that the plaintiff bears the burden to establish that personal jurisdiction exists over the defendant).

         Under this standard, a district court "consider[s] only whether the plaintiff has proffered evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction." Boit, 967 F.2d at 675. "To make a prima facie showing of this calib[er], the plaintiff ordinarily cannot rest upon the pleadings, but is obliged to adduce evidence of specific facts." Foster-Miller, Inc. v. Babcock & Wilcox Can., 46 F.3d 138, 145 (1st Cir. 1995) (citing Boit, 967 F.2d at 675).

         In July of 2016, the District Court granted the defendants' motion to dismiss PREP Tours's claims without prejudice for lack of personal jurisdiction. The District Court reasoned that, although the defendants reached out to PREP Tours regarding the trip, they "repeatedly communicated to [PREP Tours] that officials had not made a final decision in regards to the trip" and that the "unilateral" actions undertaken by PREP Tours in Puerto Rico in response were insufficient to establish personal jurisdiction over the defendants as to any of PREP Tours's claims. PREP Tours now appeals. Our review of the District Court's judgment is de novo. See Boit, 967 F.2d at 675. "Reviewing a decision made under the prima facie standard, we must accept [the plaintiff's] properly documented evidentiary proffers as true and construe them in the light most favorable to [the plaintiff's] jurisdictional claim." A Corp., 812 F.3d at 58 (citing Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008)). "But we will also consider facts offered by [the defendants], to the extent that they are not disputed." Id. (citing Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 51 (1st Cir. 2002)).


         PREP Tours conceded below, as it must, that the District Court lacks general jurisdiction over the defendants because the defendants do not have "continuous and systematic" contacts with Puerto Rico. Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011). PREP Tours nevertheless contends that the District Court erred in dismissing its claims because the District Court does have "specific or case-linked" jurisdiction over the defendants as to both of its claims. Id. Jurisdiction on this basis "depends on an affiliatio[n] between the forum and the . . . controversy" underlying the plaintiff's claims. Id. (alteration in original) (internal quotation marks omitted).

         "When . . . the lens of judicial inquiry narrows to focus on specific jurisdiction . . . . the applicable constitutional limits assume critical importance." Foster-Miller, 46 F.3d at 144. Those limits, arising from the Due Process Clause of the Fourteenth Amendment to the United States Constitution, permit a court to exercise jurisdiction over an out-of-forum defendant only if, with respect to the claims at issue, the defendant has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)).[3]

          To determine whether the exercise of specific jurisdiction in the forum over an out-of-forum defendant conforms to that federal constitutional test, three requirements must be met:

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.

United Elec., Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st Cir. 1992).

         This inquiry is highly "fact-specific." Id. As the Supreme Court has explained, the constitutional test is "not susceptible of mechanical application; rather, the facts of each case must be weighed to determine whether the requisite 'affiliating circumstances' are present." Kulko v. Superior Court of Cal., 436 U.S. 84, 92 (1978) (quoting Hanson v. Denckla, 357 U.S. 235, 246 (1958)). Moreover, "this determination is one in which few answers will be written 'in black and white. The greys are dominant and even among them the shades are innumerable.'" Id. (quoting Estin v. Estin, 334 U.S. 541, 545 (1948)).


         We begin with the requirement that PREP Tours's claims must relate to the defendants' contacts with Puerto Rico. This "flexible, relaxed standard" for assessing relatedness requires that there be only a "demonstrable nexus" between the complaint's claims and the activities in the forum that properly may be attributed to the defendants, such that "the litigation itself is founded directly on those activities." Adelson v. Hananel, 652 F.3d 75, 81 (1st Cir. 2011) (quoting N. Laminate Sales, Inc. v. Davis, 403 F.3d 14, 25 (1st Cir. 2005); Hannon v. Beard, 524 F.3d 275, 279-80 (1st Cir. 2008)).

         PREP Tours contends that, as to each of its claims, the defendants' "related" forum contacts are the defendants' remote communications with the Puerto Rico-based tour company during the four-month period beginning with Ramírez's initial inquiry email and the activities that PREP Tours undertook from Puerto Rico during those four months in response to those communications.[4] PREP Tours contends that its tort claim alleging that the defendants negotiated in bad faith arises from the defendants' contacts with Puerto Rico because it was through the defendants' remote communications with the tour company that the defendants acted in bad faith, resulting in harm to the tour company in Puerto Rico in consequence of, at least in part, the activities that PREP Tours undertook in Puerto Rico in response to those communications. PREP Tours contends that its breach-of-contract claim arises from these same set of contacts, as the remote communications between the parties and the actions that the tour company undertook in response to them provide the basis for the claim that the defendants reached into Puerto Rico to enter into the alleged contract and then breached it. See Daynard, 290 F.3d at 52 (explaining that, with respect to a breach-of-contract claim, we focus on "the parties' 'prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing'" (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479 (1985))).

         The defendants counter that PREP Tours's claims do not in fact arise from their remote communications with the tour company or the activities in Puerto Rico that PREP Tours claims to have taken in response to those communications. The defendants contend that their conduct that allegedly breached both their duty to negotiate in good faith and their alleged contract with PREP Tours was their decision to book the trip through a different company, which was a decision that they made outside of Puerto Rico. Moreover, as far as the breach-of-contract claim is concerned, the defendants point out that the complaint's only non-conclusory allegation that a contract existed between the parties is based on an email that was sent by Region 24's treasurer in California to a travel agency, Hakuna Matata, that is located in Florida and that has no connection to Puerto Rico.

         The District Court agreed with PREP Tours that the relatedness requirement for case-linked jurisdiction is met as to both the tort and contract claims, but we need not decide whether the District Court was right. Even if the defendants' remote communications with PREP Tours and PREP Tours's activities in Puerto Rico in response relate to PREP Tours's claims, PREP Tours must also show that the defendants purposefully availed themselves of the privilege of conducting activities in Puerto Rico through these contacts. See United Elec., 960 F.2d at 1089. And, as we next explain, the District Court rightly concluded that PREP Tours failed to do so. Accordingly, we turn to the purposeful availment inquiry, assuming that the contacts that PREP Tours identifies as being related to its claims are in fact related to them.[5]


         To explain why we agree with the District Court that PREP Tours has not satisfied the purposeful availment requirement as to any of its claims, we first need to describe that requirement in more detail. With that legal background in place, we then can explain why we conclude that PREP Tours, on this record, fails to make the requisite showing.


         To show that the defendants purposefully availed themselves of the privilege of conducting activities in the forum, PREP Tours must demonstrate that the defendants established a "substantial connection" with Puerto Rico. Burger King, 471 U.S. at 475 (quoting McGee v. Int'l Life Ins. Co., 355 U.S. 220, 223 (1957)). Put otherwise, PREP Tours must point to "some act by which the defendant[s] purposefully avail[ed] [them]sel[ves] of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id. (quoting Hanson, 357 U.S. at 253).

         By requiring the plaintiff to establish such a substantial connection between the out-of-forum defendant and the forum, we ensure that it is "fair to require defense of the action in the forum." Kulko, 436 U.S. at 91 (citing Milliken, 311 U.S. at 463-64). The purposeful availment requirement in this way "represents a rough quid pro quo: when a defendant deliberately targets its behavior toward the society or economy of a particular forum, the forum should have the power to subject the defendant to judgment regarding that behavior." Carreras, 660 F.3d at 555 (citing J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 879 (2011) (plurality op.)).

         The flip side of this deal, however, is that when the out-of-forum defendant has not "manifestly . . . availed himself of the privilege of conducting business there," it would be "unreasonable to require [the defendant] to submit to the burdens of litigation in that forum[.]" Burger King, 471 U.S. at 476. And, in accord with this understanding of the purposeful availment requirement, we have explained that "the two cornerstones of purposeful availment" are "voluntariness" and "foreseeability." Ticketmaster-N.Y., 26 F.3d at 207.

         "Voluntariness requires that the defendant's contacts with the forum state 'proximately result from actions by the defendant himself.'" Phillips, 530 F.3d at 28 (quoting Burger King, 471 U.S. at 475). Accordingly, the Supreme Court has explained that any contacts that cannot be attributed "proximately" to the defendant's own activities constitute "unilateral" activity that cannot establish purposeful availment. See Burger King, 471 U.S. at 475.

         In addition, the Supreme Court has described the "benchmark" for purposeful availment in terms of a particular "kind of foreseeability." Id. at 474 (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 295 (1980)); see also Donatelli v. Nat'l Hockey League, 893 F.2d 459, 464 (1st Cir. 1990) (discussing the Court's introduction of this "explicit 'foreseeability' element into the liturgy of minimum contacts"). Specifically, the Supreme Court has explained that "the foreseeability that is critical to due process analysis . . . is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." Burger King, 471 U.S. at 474 (quoting World-Wide Volkswagen, 444 U.S. at 297). For this reason, too, a plaintiff's "unilateral activity" cannot establish the requisite connection between the defendants and the forum jurisdiction. Id. at 474-75 (quoting Hanson, 357 U.S. at 253).

         There is good reason to focus on whether out-of-forum defendants could foresee being haled into a court in the forum from the connection that they are said to have with the forum. Such a focus for the inquiry "gives a degree of predictability to the legal system" because it "allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." World-Wide Volkswagen, 444 U.S. at 297.

         Notably, the fact that a defendant directly contacted the plaintiff in the forum only remotely by Internet or telephone, as allegedly happened here, does not preclude the defendant from having the substantial connection to the forum that is necessary to satisfy the purposeful availment requirement. See Burger King, 471 U.S. at 476. Such remote communications are often the primary means by which business relationships are forged and conducted. See id.

         But, as the Supreme Court has noted, the application of the rule prohibiting a plaintiff's unilateral activity from establishing the requisite foreseeable substantial connection between the defendant and the forum "will vary with the quality and nature of the defendant's activity." Id. at 474-75 (quoting Hanson, 357 U.S. at 253). Thus, the fact that the communications occurred remotely may well be relevant to the inquiry. And, to that very point, we have recently observed that three factors have been the "hing[e]" in our past assessment of purposeful availment in cases in which remote communications supplied the predicate for the contacts that ground specific or case-linked personal jurisdiction over an out-of-forum defendant: "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, 812 F.3d at 6 (emphasis added) (describing the factors from C.W. Downer & Co. v. Bioriginal Food & Sci. Corp., 771 F.3d 59 (1st Cir. 2014), and Cossart v. United Excel Corp., 804 F.3d 13 (1st Cir. 2015)).


         Against this background, we now must assess whether the showing that PREP Tours has made regarding both the nature and quality of the defendants' activities and the activities that PREP Tours engaged in that relate to the contract and tort claims at issue satisfies the purposeful availment requirement. PREP Tours relies on the three factors identified in Copia in asserting that its showing as to these activities does suffice. And so we need to address what PREP Tours has to say about how these activities relate to each of these factors.[6]

         PREP Tours does point to aspects of the record that bear on each one of these three factors. As to solicitation, we agree with PREP Tours that the record shows that one of the Region 24 volunteers, Ramírez, voluntarily reached out (remotely) from California to PREP Tours in Puerto Rico in order to ask for a price quote and for what the company could "offer" as a proposed trip for roughly sixty soccer players and their families. We can also agree that the defendants should have reasonably anticipated that some action would be undertaken by PREP Tours in Puerto Rico in response to that inquiry -- such as replying with a proposed itinerary -- given that the defendants knew that PREP Tours was located there. And, finally, we can see no reason to doubt that some foreseeable action was then actually undertaken by PREP Tours in Puerto Rico.

         But, even granting all that, as we will next explain, the factors that we identified in Copia are not present here "to remotely the same degree" as they were in our other cases on which PREP Tours relies in arguing that the purposeful availment requirement is met. Copia, 812 F.3d at 6. And, in light of that fact and our review of the relevant contacts as a whole, we conclude, as we did in Copia itself, that the in-forum ...

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