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Purposeful availment found where foreign corporation solicited business beginning two year relationship

Universal Leather, LLC v. Koro AR, S.A.
--- F.3d ---- (4th Cir.2014)

by Gregory S. Emrick, Associate
Semmes, Bowen & Semmes (

Available at:

In 2009, Universal Leather, LLC (“Universal”), a North Carolina leather wholesaler, was approached by representatives from Koro AR, S.A.(“Koro”), an Argentine company selling finished leather goods. As a result of in-person solicitations at Universal’s office in North Carolina, Universal and Koro began transacting millions of dollars in business over the course of the next two years. In 2011, the relationship faltered, and Universal brought suit against Koro in the North Carolina State Court alleging breaches of contract for late deliveries, nonpayment of certain shipping costs, impermissible price increases and defective products.

Koro removed the action to Federal Court and filed a Motion to Dismiss for lack of personal jurisdiction, including affidavits of its employees stating that Koro did not have offices, property or businesses in the United States, that it had never sent representatives to the United States, and that all the work under the contracts were performed in Argentina. The goods were all sent “F.O.B.,” requiring acceptance of the goods in Argentina. Universal opposed the motion with affidavits stating that Koro had sent representatives to Universal’s offices in April 2010, and one of the representatives returned at least six (6) times between 2009 and 2010 for the purpose of soliciting business from Universal. Universal also maintained that Universal and Koro were in regular email contact and had transacted over $5 Million in business.

The Magistrate Judge, in reviewing the conflicting affidavits, found that Koro had not purposefully availed itself of North Carolina jurisdiction, noting that no contract was entered while Koro’s employees were in North Carolina, the contracts were all performed in Argentina and the terms of the shipments declined responsibility for the goods outside of Argentina. The email communications did not satisfy the necessary minimum contacts, and the representatives’ in-state contacts were not automatically sufficient. The Court agreed with the Magistrate Judge’s conclusions and dismissed the case. Universal appealed the dismissal.

The Fourth Circuit first reviewed the law of personal jurisdiction, stating:

A federal district court may exercise personal jurisdiction over a foreign corporation only if: (1) such jurisdiction is authorized by the long-arm statute of the state in which the district court sits; and (2) application of the relevant long-arm statute is consistent with the Due Process Clause of the Fourteenth Amendment.

Universal, __ F.3d at 3. North Carolina’s long arm statute permits jurisdiction to the extent permitted by due process under the Constitution, so the Court was only required to conduct one analysis. N.C. G.S. § 1-75.4(1)(d). The Court also observed that Universal had claimed that jurisdiction was based on “specific jurisdiction,” and stated

[W]e employ a three-part test to determine whether the exercise of specific personal jurisdiction over a nonresident defendant comports with the requirements of due process. Under this test, we analyze: “(1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the forum state; (2) whether the plaintiff’s claims [arose] out of those activities; and (3) whether the exercise of personal jurisdiction is constitutionally reasonable.”

Universal, __ F.3d at 4 (internal citations removed). The Court observed that the trial court had only conducted analysis as to the first prong and limited its own analysis accordingly. The Court noted that the minimum contacts analysis was case specific and in the business context the court looked at eight (8) factors:

(1) “whether the defendant maintains offices or agents in the forum state;” (2) “whether the defendant owns property in the forum state;” (3) “whether the defendant reached into the forum state to solicit or initiate business;” (4) “whether the defendant deliberately engaged in significant or long-term business activities in the forum state;” (5) “whether the parties contractually agreed that the law of the forum state would govern disputes;” (6) “whether the defendant made in-person contact with the resident of the forum in the forum state regarding the business relationship;” (7) “the nature, quality and extent of the parties’ communications about the business being transacted;” and (8) “whether the performance of contractual duties was to occur within the forum.”

Id. Typically, a foreign defendant has been found to have purposely availed itself of the jurisdiction when these factors have demonstrated that the defendant substantially collaborated with the resident and that venture is the basis for the dispute.

In finding that Universal had met its prima facie burden of demonstrating purposeful availment, the Court held that Universal was entitled to the benefit of the inferences on contested facts, since there had been no evidentiary hearing prior to the grant of the motion to dismiss. The Court held that the facts proffered by Universal, when considered as a whole, including the allegations that Koro initiated the contacts and repeatedly reached into the forum to transact business, were sufficient to demonstrate purposeful availment. The Appellate Court expressly refused to address the remaining two prongs of the personal jurisdiction analysis and remanded the matter with instructions for the trial court to complete the analysis.