Jurisdiction (Personal)

Author:International Law Group
SUMMARY

In action brought by British company for alleged violation of trade secrets by U.S. and Taiwanese companies, Third Circuit orders dismissal of claims against Taiwanese company for lack of personal jurisdiction although defendant contracted with U.S. company for manufacture of chemical vessels and sells products in the U.S.

 
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BP Chemicals Ltd. (BP) (a British company) filed a suit in New Jersey federal court against Formosa Chemical & Fibre Corporation (FCFC) (a Taiwanese corporation), and Joseph Oat Corporation (JOC) (a Pennsylvania corporation with its principal place of business in New Jersey). BP alleged that the defendants violated BP's trade secrets regarding its chemical process for making acetic acid. In particular, BP alleged that the defendants had copied parts of an acetic acid manufacturing plant that BP's predecessor, Monsanto, had provided to China Petrochemical Development Corporation (CPDC). BP also alleged that FCFC and JOC contracted to have JOC manufacture some chemical process vessels based on misappropriated technical specifications for use in the building of an acetic acid plant in Taiwan.

A publicly-traded Taiwanese company with its principal place of business in Taipei, Taiwan, FCFC owns 3.51% of the stock of a U.S. company. The contract between FCFC and JOC for the manufacture of the disputed chemical vessels resulted from a bid where JOC offered to make them for the lowest price. All meetings between FCFC and equipment vendors took place in Taiwan and no FCFC personnel visited the U.S. on this matter. It also appears that FCFC has never advertised its products in the U.S. FCFC did have other contacts with the U.S., including the sale of rayon and fiber to U.S. customers. Taiwanese agents, however, had carried out these sales.

FCFC moved to dismiss the claims against it for lack of personal jurisdiction. The district court ultimately denied the motion and granted BP's motion for injunctive relief. Finding that the lower court did not have personal jurisdiction over FCFC, the U.S. Court of Appeals for the Third Circuit reverses and remands for further proceedings against JOC only.

The Court concludes that FCFC lacked enough minimum contacts with New Jersey to conform to its long-arm statute or to the federal due process clause. Nor did it have enough contacts with the U.S. as a whole to permit jurisdiction over FCFC under Fed. R. Civ. Pro. 4(k)(2). The Rule seemingly provides for jurisdiction over foreign defendants for claims arising under federal law when the defendant has sufficient contacts with the U.S. as a whole to justify the imposition of U.S. law though defendant lacks enough links to satisfy the due process concerns of the long-arm statute of any...

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