Federman & Sherwood Receives Favorable Decision by Tenth Circuit Court of Appeals

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

 


P. DAVID NEWSOME, JR., Liquidating Trustee of Mahalo Energy (USA), Inc.,

          Plaintiff-Appellant,

v.        No. 12-5068

WILLIAM GALLACHER, DUNCAN CHISHOLM, GARY H. DUNDAS, JEFF G. LAWSON, JAMES BURNS, KEVIN WOLFE, DAVID E. BUTLER, and BURNET, DUCKWORTH AND PALMER, LLP,

           Defendants-Appellees.

 


 

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF OKLAHOMA

 (D.C. NO. 4:11-CV-00140-GKF-PJC)

Ali M. M. Mojdehi, Cooley LLP, San Diego, California (Janet D. Gertz, Cooley LLP, San Diego, California, and William B. Federman and Joshua D. Wells, Federman & Sherwood, Oklahoma City, Oklahoma, with him on the briefs) for Appellant.

Craig Fitzgerald, GableGotwals, and Paula J. Quillin, Franden, Woodard, Farris, Quillin + Goodnight (John Henry Rule, GableGotwals, and Joseph R. Farris, Franden, Woodard, Farris, Quillin + Goodnight, with them on the brief) Tulsa, Oklahoma, for Appellees.

 


 

Before TYMKOVICH, SEYMOUR, and GORSUCH, Circuit Judges.

TYMKOVICH, Circuit Judge.

          This case requires us to answer a classic personal jurisdiction question— who was injured, and where? The answer to that question will determine whether the representative of a Canadian-owned Delaware corporation operating exclusively in Oklahoma may sue the corporation’s Canadian officers and directors in Oklahoma.

          To bring a suit, the plaintiff must show the defendants are subject to personal jurisdiction in Oklahoma. The Constitution allows for personal jurisdiction only when the requirements of due process are met. Here we conclude the Constitution allows this lawsuit to proceed in Oklahoma.

          Plaintiff David Newsome is a litigation trustee appointed by the Bankruptcy Court for the Eastern District of Oklahoma to administer the legal claims of Mahalo Energy (USA), Inc. Newsome brought suit in the Northern District of Oklahoma alleging various breaches of fiduciary duty against the corporation’s former directors and officers, other closely affiliated persons, and a law firm that provided legal services to the corporation. All defendants are Canadian citizens or entities domiciled in Alberta. The defendants moved to dismiss for lack of personal jurisdiction and the district court granted that motion.

           We conclude the district court erred in part. Specifically, we hold the individual defendants (every defendant but the law firm) cultivated sufficient -2- contacts with Oklahoma to justify suit there. We also hold that the fiduciary shield doctrine—under which personal jurisdiction may not attach to a corporate agent by virtue of actions the agent takes solely on the corporation’s behalf—does not apply here. We therefore reverse as to the individual defendants and remand for further proceedings.

          As for the law firm, however, we affirm. Given the law firm’s out-of-state character and that it performed all of its relevant services out-of-state on an out- of-state transaction, it did not cultivate sufficient contacts with Oklahoma to justify personal jurisdiction there. The district court therefore correctly dismissed the law firm.

To Read the Complete Opinion and Decision, please click here.

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