Court Opinion

ID: 3179005
Source: CourtListenerOpinion
Date Created: 2016-02-19 20:04:30.656212+00
Date Added: 2024-06-11T07:38:55.218574
License: Public Domain

PUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                             No. 14-2120

PERDUE FOODS LLC,

                 Plaintiff - Appellant,

            v.

BRF S.A.,

                 Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.      James K. Bredar, District Judge.
(1:14-cv-01007-JKB)

Argued:   December 9, 2015                Decided:   February 19, 2016

Before MOTZ and FLOYD, Circuit Judges, and John A. GIBNEY, Jr.,
United States District Judge for the Eastern District of
Virginia, sitting by designation.

Affirmed by published opinion. Judge Motz wrote the opinion, in
which Judge Floyd and Judge Gibney joined.

ARGUED: Damon W.D. Wright, VENABLE LLP, Washington, D.C., for
Appellant. Jeffrey Eric Ostrow, SIMPSON THACHER & BARTLETT LLP,
Palo Alto, California, for Appellee.       ON BRIEF: Brandon C.
Martin, Palo Alto, California, Lori E. Lesser, SIMPSON THACHER &
BARTLETT LLP, New York, New York; Geoffrey H. Genth, KRAMON &
GRAHAM, P.A., Baltimore, Maryland, for Appellee.
DIANA GRIBBON MOTZ, Circuit Judge:

        Perdue     Holdings,           Inc.      appeals        the        district       court’s

dismissal of its breach of contract action against BRF S.A. for

lack     of     personal       jurisdiction.             Perdue       contends          that    BRF

purposefully availed itself of the privilege of doing business

in   Maryland,        and      thus     that     personal       jurisdiction            over     BRF

properly       lies       in   the     United    States       District       Court       for     the

District of Maryland.                For the reasons that follow, we affirm.

                                                I.

        Perdue,       a    wholly       owned        subsidiary       of     a    family-owned

international         food      producer       headquartered          in    Maryland,          sells

poultry using the mark “PERDUE.”                         BRF, an international food

company and exporter of poultry meats headquartered in Brazil,

sells poultry using the mark “PERDIX.”                        BRF’s sole connection to

Maryland is its relationship with Perdue.

       In 2002, Perdue became concerned about potential consumer

confusion       between        the     similar       PERDUE     and   PERDIX        trademarks.

Perdue        contacted        BRF’s     predecessor,         Perdigão           Agroindustrial

S.A.,     and     the      parties       negotiated        --       remotely       --    a      2003

“Worldwide       Coexistence           Agreement”       and     a   later        2005    addendum

(hereafter       collectively           “the     Agreement”).          BRF        executed       the

Agreement in Brazil and Perdue executed it in Maryland.

                                                 2
       In the Agreement, the parties stated that they sought “to

avoid any and all confusion between” their respective marks and

“to    resolve       all    pending       and       future     possible        controversies

regarding” the marks.            To that end, Perdue agreed to refrain

from registering its PERDUE mark in Brazil, and BRF agreed to

abandon a version of its PERDIX mark worldwide.                                  The parties

also agreed to withdraw opposition worldwide to each other’s

marks that complied with the Agreement.                            The Agreement states

that it will remain in force for the life of the respective

trademarks.       It contains a Maryland choice-of-law clause.

       From    2012    to    2014,     Perdue        bought        an    aggregate      715,000

pounds   of    chicken      (valued       at    approximately            $606,903.80)      from

BRF.     Perdue sent purchase orders from Maryland and BRF sent

invoices to Maryland for the orders, but at Perdue’s direction

BRF shipped the chicken from Brazil to Tanzania.

       Later in 2014, Perdue brought this action against BRF in

federal court in the District of Maryland.                              Perdue alleged that

BRF    breached      the    Agreement      by       pursuing       new    applications        for

trademark      registrations         in    Argentina,          Morocco,         São    Tomé     &

Príncipe,      and    Uruguay    and       by       refusing       to     abandon      existing

trademark     registrations       in      Canada,       China,          Hong   Kong,    Kuwait,

Lebanon, Argentina, Bolivia, Paraguay, and Uruguay (hereafter,

“Foreign      Countries”      refers      to     these       two    groups     of     countries

collectively).

                                                3
     Pursuant to Fed. R. Civ. P. 12(b)(2), BRF moved to dismiss

Perdue’s suit for lack of personal jurisdiction.                   The district

court held that Perdue had failed to allege facts sufficient to

establish   that    BRF   had    the    requisite     minimum   contacts      with

Maryland.   Accordingly, the court held that it lacked personal

jurisdiction    over   BRF      and    granted    BRF’s   motion   to   dismiss.

Perdue filed this timely appeal.

                                        II.

     The sole issue on appeal is whether the district court had

personal jurisdiction over BRF.              We review a judgment dismissing

for lack of personal jurisdiction de novo.                  Consulting Eng’rs

Corp. v. Geometric Ltd., 561 F.3d 273, 276 (4th Cir. 2009).

Where, as here, the district court decides jurisdiction on the

motion papers alone, the plaintiff need only make a “prima facie

showing of a sufficient jurisdictional basis” to prevail.                     Combs

v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).

     When a federal court sits in diversity, it “has personal

jurisdiction over a non-resident defendant if (1) an applicable

state   long-arm     statute      confers        jurisdiction   and     (2)    the

assertion of that jurisdiction is consistent with constitutional

due process.”      Nichols v. G.D. Searle & Co., 991 F.2d 1195, 1199

(4th Cir. 1993).       The reach of Maryland’s long-arm statute is

coextensive with the reach of the Due Process Clause of the

                                         4
United     States     Constitution,      so       the    “statutory       inquiry    merges

with [the] constitutional examination.”                          Beyond Sys., Inc. v.

Realtime Gaming Holding Co., LLC, 878 A.2d 567, 580 (Md. 2005).

       A   court      may     exercise        general       or       specific      personal

jurisdiction.                General     personal           jurisdiction           requires

“continuous and systemic” contacts with the forum state.                                See

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,

414-16 (1984).        Perdue does not claim that BRF has such contacts

with Maryland and does not assert that the district court had

general personal jurisdiction over BRF.                         What Perdue does claim

is that the district court had specific personal jurisdiction

over BRF arising from BRF’s contacts with Perdue.

       For a court to have specific personal jurisdiction over a

defendant,      the    defendant       must       have    “purposefully      established

minimum    contacts     in     the   forum        State”    such     “that   [it]   should

reasonably anticipate being haled into court there.”                                 Burger

King   Corp.    v.    Rudzewicz,       471 U.S. 462,    474    (1985)   (internal

quotation marks and citations omitted).                          This analysis is not

“mechanical,” id. at 478; a court must weigh “the totality of

the facts before” it, Universal Leather, LLC v. Koro AR, S.A.,

773 F.3d 553,    561    (4th     Cir.       2014).        To     determine    whether

specific jurisdiction lies in the forum state, “we consider (1)

the extent to which the defendant purposefully availed itself of

the privilege of conducting activities in the State; (2) whether

                                              5
the plaintiffs’ claims arise out of those activities directed at

the State; and (3) whether the exercise of personal jurisdiction

would    be     constitutionally          reasonable.”              ALS   Scan,     Inc.   v.

Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir.

2002) (internal quotation marks omitted).                            The plaintiff must

prevail on each prong.          Consulting Eng’rs, 561 F.3d at 278.

                                           III.

      Perdue’s contention that a federal court in Maryland has

personal      jurisdiction      over      BRF      falters      on    the    first    prong.

Under that prong, we consider numerous nonexclusive factors to

assess a party’s purposeful availment.                         Consulting Eng’rs, 561
F.3d at 278.           In the business context, these factors include

whether the defendant “maintains offices or agents in the forum

state;” “owns property in the forum state;” “reached into the

forum    state    to    solicit      or    initiate          business;”      “deliberately

engaged in significant or long-term business activities in the

forum state;” or “made in-person contact with the resident of

the     forum     in     the    forum        state       regarding          the     business

relationship.”          Id.     We     also       consider      “whether      the    parties

contractually      agreed      that    the        law   of    the    forum    state    would

govern disputes;” “whether the performance of contractual duties

was to occur within the forum;” and “the nature, quality and

                                              6
extent of the parties’ communications about the business being

transacted.”            Id.

        Perdue has alleged few facts to satisfy its prima facie

burden in support of personal jurisdiction.                       Indeed, the only

fact        that   it    alleges    that   indisputably      weighs    in   favor    of

jurisdiction is that the Agreement includes a Maryland choice-

of-law clause.

       Many undisputed facts indicate that a Maryland court does

not have personal jurisdiction over BRF.                   The company employs no

Maryland officers or agents and owns no property in the state.

BRF did not initiate the negotiations that led to the Agreement,

and no BRF employee traveled to Maryland in connection with the

Agreement.         BRF conducts no business in Maryland:                it does not

import any products into or sell or ship products to any clients

in Maryland, and it has no contract with any entity in Maryland

other       than   Perdue.         BRF’s   alleged      breach   of   the   Agreement

occurred not in Maryland, but in the Foreign Countries. 1

        Further,        the   Agreement    does   not    even    require    Perdue   to

perform any contractual duties in Maryland.                      If BRF had entered

        1
       Perdue also alleged that BRF had filed, but had later
withdrawn, intent-to-use trademark applications for the PERDIX
mark with the United States Patent and Trademark Office.
Assuming that this constituted breach of the Agreement, the
breach did not occur in Maryland -- the United States Patent and
Trademark Office is headquartered in Virginia.     See About Us,
United      States     Patent      and     Trademark      Office,
http://www.uspto.gov/about-us (last modified Feb. 12, 2015).

                                            7
a   contract     that   required    Perdue          to   perform       significant

contractual duties in Maryland, personal jurisdiction over BRF

might lie in Maryland.         See Peanut Corp. of Am. v. Hollywood

Brands, Inc., 696 F.2d 311, 314 (4th Cir. 1982).                    But although

Perdue    executives    may   decide       global    trademark        strategy   in

Maryland, the Agreement does not require those decisions to take

place in Maryland.

     Nor can Perdue establish that BRF “deliberately engaged in

significant     or   long-term   business      activities        in     the   forum

state.”     Consulting Eng’rs, 561 F.3d at 278.             Of course, such a

showing could provide a basis for personal jurisdiction over a

defendant, as it did in Burger King.            Moreover, a plaintiff may

be able to make such a showing through a single contract because

often a contract is “but an intermediate step serving to tie up

prior     business   negotiations      with    future     consequences        which

themselves are the real object of the business transaction.”

Burger King, 471 U.S. at 479 (internal quotation marks omitted).

Thus, specific personal jurisdiction can arise from one contract

“where    the   defendant   deliberately      has    engaged   in      significant

activities within a State, or has created continuing obligations

between [it]self and residents of the forum.”                    Id. at 475-76

(internal quotation marks and citations omitted).

                                       8
     In Burger King, the Court held that, although the defendant

lacked other contacts with the forum state, a single contract

provided a sufficient basis for personal jurisdiction.                                        Id. at

478-80.      That contract was a franchise agreement between the

Burger     King      Corporation,         headquartered          in      Florida,             and     a

franchisee citizen of Michigan.                     Id. at 464-66.            The franchisee

initiated       negotiations         with       Burger      King       for         a    franchise

agreement, but never traveled to Florida.                          Id. at 479-80.                   The

franchise agreement contained not just a Florida choice-of-law

provision, like the Agreement here, but also other significant

provisions not present here.                     Id. at 465-66.               The franchise

agreement         established        “a         carefully         structured              20-year

relationship         that     envisioned            continuing         and     wide-reaching

contacts    with      Burger    King       in       Florida.”      Id.        at       480.         The

franchisee promised to pay a franchise fee, monthly royalties,

advertising and sales promotion fees, and rent to Burger King in

Florida,     and     to     submit    to    regulation          from     Burger          King        in

Florida.        Id. at 465-66.         Weighing all of these factors, the

Supreme Court held that the federal district court in Florida

had personal jurisdiction over the Michigan franchisee.

     Here,      by    contrast,      the        Agreement       does    not        establish          a

series     of     continuing     contacts            between     BRF         and       Perdue        in

                                                9
Maryland. 2          The      Agreement       does     not        launch      any      ongoing

collaboration or promise frequent interactions between these two

companies.           Rather,     it     expressly      prevents         BRF     from    doing

business      in   Maryland      with    a     version       of   its   trademark.            Of

course, this constitutes a contractual duty.                           And the Agreement

was certainly significant, given its global nature and branding

implications.           But these ongoing duties not to do business in

Maryland do not demonstrate that BRF purposefully availed itself

of the privilege of doing business in Maryland.

     Perdue contends that, in Burger King, the Supreme Court

held that all contracts creating continuing obligations with a

party    in    the      forum    state       require     a    finding      of    purposeful

availment.         We    do    not    read    Burger     King     as    creating       such    a

bright-line rule.             First, as discussed above, Burger King itself

admonished that personal jurisdiction cannot “turn on mechanical

     2 Perdue contends that we should consider facts that speak
to whether BRF deliberately engaged in significant activities in
Maryland separately from those that speak to whether it created
continuing obligations with Maryland residents.     However, the
“constitutional touchstone” of the analysis articulated in
Burger King is “whether the defendant purposefully established
‘minimum contacts’ in the forum State.” 471 U.S. at 474
(internal citations omitted).     “Continuing obligations” alone
can potentially suffice, but courts need not consider any facts
or factors in isolation when analyzing the defendant’s contacts
with the forum state.    The Burger King Court itself considered
that the defendant “did not maintain offices in” the forum state
and “ha[d] never even visited there” in addition to considering
the continuing obligations created between the defendant and the
forum state by virtue of the franchise agreement. Id. at 479.

                                              10
tests.” 471 U.S. at 478 (internal quotation marks omitted).

Second, implicit in the Supreme Court’s distinction between a

contract      --     which    cannot,      by      itself,         establish         purposeful

availment,         id.   at   478    --    and     a        contract       with      continuing

obligations         --    which      “manifestly”             constitutes            purposeful

availment,         id.   at    475-76      --     is        the    assumption        that    the

continuing      obligations       strengthen        a       defendant’s        contacts     with

the   plaintiff’s        forum.      Cf.     id.       at    479    (noting       that   future

consequences are ordinarily “the real object of [a] business

transaction” (citation and internal quotation marks omitted)).

The “continuing obligations” set forth in the Agreement in this

case did no such thing.                 They had no effect on the “extent,

nature,      and    quality”    of    BRF’s       contacts         with    Maryland.         See

Consulting Eng’rs, 561 F.3d at 281.

          In an attempt to equate its case to Burger King, Perdue

points to a handful of intermittent chicken orders as evidence

of    a    collaborative,      long-term        relationship          that     it     maintains

would not have existed absent the Agreement.                          Perdue argues that

without the Agreement the companies would have been litigating

over trademarks instead of doing business together.                               But even if

the Agreement made these chicken orders possible, these contacts

--    receiving      purchase       orders      from        and    sending        invoices    to

Maryland      for    chicken    shipments         to    Tanzania          --   are    far    more

                                             11
attenuated than the frequent and important contacts that the

Burger King franchise agreement contemplated.

       We recognize that physical presence in the forum state is

not essential.          Rather, “it is an inescapable fact of modern

commercial      life    that        a   substantial         amount        of   business      is

transacted solely by mail and wire communications across state

lines, thus obviating the need for physical presence within a

State in which business is conducted.”                      Burger King, 471 U.S. at

476.    We emphasize that if the parties had entered a contract

that     created        a      meaningful             relationship         with       frequent

communication,         even     if      no      BRF    employee      entered         Maryland,

personal jurisdiction might well lie in the federal district

court in Maryland.             However, BRF neither purposefully directed

activities toward Maryland nor established regularly recurring

and ongoing interactions with Perdue in Maryland.                                   “Because a

sovereign’s     jurisdiction            remains       territorial,        to   justify      the

exercise of personal jurisdiction over a non-resident defendant,

the defendant’s contacts with the forum state must have been so

substantial that they amount to a surrogate for presence and

thus   render    the        exercise       of    sovereignty       just.”           Consulting

Eng’rs, 561 F.3d at 277-78 (internal quotation marks omitted).

Such substantial contacts are absent here.

       Given    the    undisputed          facts      in   this    case,       we    can    only

conclude   that       BRF     did    not     purposefully         avail    itself      of    the

                                                12
privilege of doing business in Maryland.    Thus, the district

court correctly held that it lacked personal jurisdiction over

BRF.

                              IV.

       For the foregoing reasons, the judgment of the district

court is

                                                     AFFIRMED.

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