On appeal, the court explained what constitutes “minimum contacts” so as to justify a court’s exercise of personal jurisdiction.[1] Because BRF did not have continuous and systemic contacts with Maryland, Perdue had to show that BRF “purposefully established minimum contacts in the forum state” such “that [it] should reasonably anticipate being haled into court there.” How could Perdue show that? The court laid out a test, which considers: “(1) the extent to which [BRF] purposefully availed itself of the privilege of conducting activities in [Maryland]; (2) whether [Perdue’s] claims arise out of those activities directed at [Maryland]; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable.” These factors can be shown in many different ways, such as the existence of offices or agents or ownership of property in the state, deliberately conducting significant or long-term business activities in the state, or making in-person contact with the resident of the state regarding the business relationship. The court said that it would also consider whether the parties contractually agreed that the law of the state would govern disputes and whether the performance of contractual duties was to occur in the state, as well as the nature, quality, and extent of the parties’ communications about the business being transacted.
Looking at BRF, however, the court found that it had no significant relationship to Maryland other than the choice-of-law clause in the agreement– BRF had no officers or agents in Maryland, did not own property in Maryland, did not initiate the negotiations with Perdue or have any in-person contacts in Maryland, and did not conduct any business in Maryland. Moreover, the court found, the agreement expressly prevented BRF from doing business in Maryland, which, in the court’s opinion, negated that BRF purposefully availed itself of the privilege of doing business in Maryland. The intermittent chicken orders shipped to Tanzania, of course, did not establish frequent and ongoing contacts with Maryland. Although the court recognized that physical presence in Maryland was not essential, given the reality of modern commercial life that requires a substantial amount of business to be transacted remotely, BRF’s contacts with Maryland would still need to be substantial and meaningful. Accordingly, the court concluded that BRF did not purposefully avail itself of the privilege of doing business in Maryland and affirmed the lower court’s holding that it lacked personal jurisdiction over BRF.
So, when can I reasonably anticipate being haled into court in another state? The answer would depend on the quantity and quality of the contacts your business has with that state. Fortunately, business owners can have some control over where they want to litigate cases by agreeing to a venue and the exercise of personal jurisdiction by a state’s courts. Perhaps now may be a good time to go back and review your key contracts.
This post was part of a multi-part series on personal jurisdiction. You can find the other post by searching our blogs at www.mcbrideattorneys.com. If you have any questions about the content of this blog or other business law issues not discussed here, please contact us.
This posting is intended to be a planning tool to familiarize readers with some of the high-level issues discussed herein. This is not meant to be a comprehensive discussion and additional details should be discussed with your transaction planners including attorneys, accountants, consultants, bankers and other business planners who can provide advice for your circumstances. This article should not be treated as legal advice to any person or entity.
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[1] See generally Perdue Foods LLC v. BRF S.A., No. 14-2120 (4th Cir. Feb. 19, 2016). Unless otherwise noted, all references to the case are from this citation.