Opinion ID: 4573439
Heading Depth: 3
Heading Rank: 3

Heading: Personal Jurisdiction in Contract Cases

Text: We recognize that applying the aforementioned precepts in an individual case is on occasion a far more difficult task than setting them out on paper. For instance, even the United States Supreme Court has acknowledged that “[t]he conclusion that the authority to subject a defendant to judgment depends on purposeful availment . . . does not by itself resolve many difficult questions of jurisdiction that will arise in particular cases.” J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 885 (2011). Indeed, the Court has explicitly recognized that when analyzing the validity of the exercise of personal jurisdiction, “few answers will be written ‘in black and white. The greys are dominant and even among them the shades are innumerable.’” Kulko, 436 U.S. at 92 (quoting Estin v. Estin, 334 U.S. 541, 545 (1948)). 14 Moreover, in contract cases in particular, the validity of the exercise of personal jurisdiction over a nonresident defendant has often fit squarely within the grey area. See, e.g., Mountaire Feeds, Inc. v. Agro Impex, S.A., 677 F.2d 651, 655 (8th Cir. 1982) (“Application of International Shoe to . . . cases involving contract claims by resident plaintiffs against nonresident corporate defendants . . . has produced somewhat inconsistent results.”); see also Mark. J. Gentile, Note, Long-Arm Jurisdiction in Commercial Litigation: When Is a Contract a Contact, 61 B.U. L. Rev. 375, 401 (1981) (“Determining which activities constitute purposeful connection with a forum has proven a difficult task. The problem is highlighted in cases involving single-contract contacts.”). This circumstance did not go unnoticed by the United States Supreme Court. In Lakeside Bridge & Steel Co. v. Mountain State Construction Co., 597 F.2d 596 (7th Cir. 1979), cert. denied, 445 U.S. 907 (1980), the Seventh Circuit Court of Appeals addressed a question of the validity of personal jurisdiction in a contract case. The West Virginia defendant had a contract to construct the outlet works for a dam project in Virginia. The Wisconsin plaintiff visited the defendant’s office in West Virginia to solicit a subcontract to supply structural assemblies for the outlet works. The defendant ultimately accepted the proposal and mailed a purchase order to the plaintiff in Wisconsin. Lakeside Bridge, 597 F.2d at 598. The contacts between the plaintiff and the defendant all occurred outside Wisconsin or by mail or telephone. During the subcontract negotiation process “and presumably afterward,” there were telephone conversations and mail correspondence between the parties. Id. However, the defendant had “no place of business, property, bank deposits, telephone, or telephone listing in Wisconsin and ha[d] never sent any officer, agent, or employee to that state; nor ha[d] it had any other kind of contact with Wisconsin except for the events that gave rise to this action.” Id. at 597. The plaintiff manufactured the structural assemblies in Wisconsin and shipped them to the project site in Virginia. The defendant found the goods to be defective in certain respects and withheld a portion of the payment due for the goods. The plaintiff sued for breach of contract in Wisconsin. Id. at 598. The Seventh Circuit Court of Appeals held that Wisconsin lacked specific personal jurisdiction over the defendant. Id. at 597. In evaluating whether the defendant had minimum contacts with Wisconsin, the court looked to the contract and the communications between the parties during contract negotiation and performance. Id. at 600. The court determined that the defendant had not purposefully availed itself of the privilege of conducting activities in Wisconsin. Instead, the court found that the 15 jurisdictional basis was the “performance of contractual obligations by the plaintiff, not the defendant, in the forum state.” Id. at 601. The court considered this basis to be the result of the “unilateral activity” of the plaintiff rather than attributable to the defendant. Id. at 600-01, 603 (quoting Hanson, 357 U.S. at 253). The court viewed as very significant that the plaintiff was in absolute control over where to conduct the activity to fulfill the contract, even though the defendant may have believed the plaintiff would do so in Wisconsin. Id. at 603. The plaintiff sought review in the United States Supreme Court. The Court denied