Daktronics, Inc. v. LBW Tech Co. - 2007 S.D. 80, 737 N.W.2d 413

Rule:

The South Dakota Supreme Court has established a three-step test to determine whether minimum contacts exist and due process is satisfied. Under this test: First, the defendant must purposefully avail himself of the privilege of acting in the forum state, thus invoking the benefits and protections of its laws. Second, the cause of action must arise from defendant's activities directed at the forum state. Finally, the acts of defendant must have substantial connection with the forum state to make the exercise of jurisdiction over defendant a reasonable one.

Facts:

Daktronics, Inc. brought suit against LBW Tech Co., Inc. and Ling Tang in South Dakota seeking a declaratory judgment and damages for deceit and negligent misrepresentation. LBW and Daktronics had entered into a contract wherein LBW would facilitate Daktronics' exploration of business opportunities in China. Under the contract, LBW attempted to secure contracts between Daktronics and Chinese businesses. LBW and Tang filed a motion to dismiss pursuant to SDCL 15-6-12(b) for lack of personal jurisdiction, improper venue and/or forum non conveniens. The circuit court dismissed the action based upon lack of personal jurisdiction. Daktronics appealed. 

Issue:

Did sufficient minimum contracts exist to confer personal jurisdiction over the defendants? 

Answer:

Yes.

Conclusion:

The supreme court noted that Ling Tang knew that she was negotiating with a South Dakota corporation for the creation of a continuing three-year contract with the corporation and the benefits that would derive from such a relationship. She had an obligation to provide services to a South Dakota corporation, even though such services were performed in China. She submitted status reports and reimbursement requests to South Dakota. She voluntarily accepted the regulation of her business from the corporation's headquarters in South Dakota. Moreover, Ling Tang received payment for her services and reimbursement for her expenses from South Dakota. The substantive negotiations took place in South Dakota and through numerous communications with the corporation's representatives in South Dakota via both telephone and e-mail. Ling Tang knew she was entering into an ongoing relationship with a South Dakota corporation and assuming obligations that would directly affect the corporation. South Dakota had an interest in resolving contractual disputes that have a significant impact on a South Dakota corporation.