Court Opinion

ID: 6464519
Source: CourtListenerOpinion
Date Created: 2022-06-25 12:51:51.625808+00
Date Added: 2024-06-11T15:52:51.374942
License: Public Domain

Grainger, J.
(dissenting). This defendant presents all the characteristics of an archetypal passive purchaser, and none to the contrary. In my view the judge was correct in his determination that we cannot properly assert personal jurisdiction over the defendant in Massachusetts.
Factual background. A buyer in New York (Selective) entered into an agreement with a seller incorporated in Nevada (Diamond) whose principal (Jeffrey Parker) worked and resided in Massachusetts to have perfume, located in a warehouse in New Jersey, delivered within New Jersey and to New York. Of the States connected, however tangentially, to this commercial arrangement, two can easily be determined to have personal jurisdiction over the defendant: (1) New York, where the defendant was located and accepted shipments, and (2) New Jersey, where the goods were stored and the defendant also accepted *558shipments. Massachusetts, by contrast, the State in which the seller chose to reside and conduct a long-distance brokerage business, was irrelevant to any of the business activity at issue. On this record I cannot conclude that the defendant transacted business here, much less that it “purposefully avail[ed]” itself of the “benefits and protections” of Massachusetts law. Tatro v. Manor Care, Inc., 416 Mass. 763, 772 (1994).
Our consideration should begin with the fact that no goods transferred between the parties ever entered the Commonwealth pursuant to any dealings between them. The plaintiff’s attempts to trace some of the perfumes through interstate commerce to eventual retail destinations at a later date only emphasizes that fact.1
The parties made a straightforward agreement for the delivery of products to the defendant’s places of business. The agreement was neither negotiated in Massachusetts nor subjected to any change or renegotiation after formation, here or elsewhere. The plaintiff does not dispute that the parties’ only contact in Massachusetts was on a social basis between the principals, Diamond’s chief executive officer, Parker, and Selective’s president, Dennis J. Schnur, on one or two occasions, and not until some five or six years after their commercial relationship had been established.2
It is worth repeating the judge’s findings, already set forth in the majority opinion, as they have full support in the record:
“In the present action as established by the affidavit of *559Dennis Sch[n]ur . . . , the defendant, Selective, does no business in Massachusetts, maintains its only office in Jericho, New York, has no office, business location or representative in Massachusetts, and has a total of two employees, none of whom lives or works in Massachusetts. In addition, Selective does not own, lease, or utilize any real property in Massachusetts, has no bank accounts in Massachusetts, does not maintain any business or corporate records in Massachusetts, pays no taxes in this state, and is not registered to do business in Massachusetts. Further, Selective has not availed itself of the Massachusetts courts in any way, and all services provided by Selective are performed in the State of New York. While Selective does purchase products from companies outside of New York, including products from the plaintiff through its Massachusetts office, those products are delivered by those companies, like the plaintiff, to Selective, outside of Massachusetts. Indeed, the invoices in this case note that the products in question are delivered to Jericho, New York.”
Discussion. 1. Long-arm jurisdiction. As stated, I am dubious that the defendant can accurately be said to have “done business” in the Commonwealth by simply engaging in a long-distance commercial relationship with a Massachusetts resident. But, even if one were to accept that characterization, the judge’s decision below was clearly correct in my view because the due process requirements of the Fourteenth Amendment to the United States Constitution, as elaborated by the United States Supreme Court, are lacking in this case.3
2. Due process. In order for the assertion of Massachusetts jurisdiction to survive a due process challenge, the plaintiff must demonstrate that the defendant purposely participated in *560commercial activity within the borders of Massachusetts so that the defendant can be said to have taken advantage of the “benefits and protections” of its presence here. See International Shoe Co. v. Washington, 326 U.S. 310, 319 (1945). The established jurisdictional test of “traditional notions of fair play and substantial justice” is based on a principle of reciprocity between benefits and obligations. See Sawtelle v. Farrell, 70 F.3d 1381, 1389 (1st Cir. 1995) (citation omitted) (“the defendant’s in-state contacts must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state’s laws”).
In the vast majority of cases, including this one, a vendor can decide whether to introduce products or services into a particular jurisdiction. As this case also illustrates, a purchaser normally selects a particular product or service, and then receives it from whatever jurisdiction the vendor has chosen as a place of business. For this reason, our law recognizes that the vendor-purchaser distinction is crucial to a due process “availment of benefits” analysis. Here, the plaintiff’s storage of goods in New Jersey, and its transfer of goods both within New Jersey and to New York, is in stark contrast with the location from which it has chosen, as a broker, to manage these transfers and generate invoices. The defendant obviously participated in the commercial activity taking place in New York and New Jersey, but had no role and no interest in the fact that the plaintiff directed its own activities from Massachusetts.
A review of the cases cited by the majority that have imposed personal jurisdiction in Massachusetts over a nonresident purchaser is instructive. In each case the purchaser’s physical presence in Massachusetts by choice was the due process linchpin on which the proper exercise of jurisdiction turned.4 See Whitaker Corp. v. United Aircraft Corp., 482 F.2d 1079, 1082-1085 (1st Cir. 1973) (contrasting passive and active purchasers where *561jurisdiction was imposed over a defendant that came to Massachusetts to supervise the plaintiff’s work — while jurisdiction simultaneously was adjudged lacking over defendants who did not come to Massachusetts during contract formation and whose later contacts were deemed “ancillary” to the placement of orders). See also Carlson Corp. v. University of Vt., 380 Mass. 102,105-106 (1980) (defendant came to Massachusetts to execute the contract); Buctouche Fish Mkt., Ltd. v. City Sea Foods, Inc., 735 R Supp. 441, 442-443 (D. Mass. 1990) (one defendant was more than simply a purchaser, as it both bought and resold seafood in Massachusetts; the other defendant, a purchaser only, sent representatives to Massachusetts to meet with suppliers); Fairview Mach. & Tool Co. v. Oakbrook Intl., Inc., 56 R Supp. 2d 134, 139 (D. Mass. 1999) (defendants’ representatives visited Massachusetts on at least two occasions during construction to inspect the progress of ordered machinery). Finally, in Sonesta Intl. Hotels Corp. v. Central Fla. Invs., Inc., 47 Mass. App. Ct. 154, 160-162 (1999), it was undisputed that the plaintiff would perform the services contemplated under the parties’ contract in Boston. In that case we found it important that the defendant initiated a relationship that, by its nature, would require multiple future contacts in Massachusetts with the plaintiff.5
The contrast between these cases and the instant one need not be belabored. Other than placing orders and remitting payment to Diamond — activities that have always been found to be indicative of the “passive purchaser” under our case law — Selective had no contact with Massachusetts. Indeed, it was of no consequence to either party’s rights or obligations under the contract that the plaintiff’s principal, Parker, resided in Massachusetts (but was not registered to do business here) while his company, Diamond, remained incorporated in Nevada for the *562entire period at issue.6 In short, this case fails the elementary due process test best enunciated by the United States Court of Appeals for the First Circuit: “[T]he claim underlying the litigation must directly arise out of, or relate to, the defendant’s forum-state activities.” Pritzker v. Yari, 42 F.3d 53, 60 (1st Cir. 1994), cert, denied, 514 U.S. 1108 (1995), quoting from United Elec., Radio & Mach. Wkrs. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1089 (1st Cir. 1992).7
Finally, I cannot agree with the relevance assigned by the plaintiff to the number of invoices, which simply accompanied transfers within New Jersey or shipments from New Jersey to New York, during the contract period. Case law has rejected, correctly in my view, the assignment of significance to a purely quantitative argument in a due process analysis. See L & P Converters, Inc. v. H.M.S. Direct Mail Serv., Inc., 634 F. Supp. 365, 366 (D. Mass. 1986) (lack of jurisdiction over a foreign defendant where a four-year commercial relationship with an in-State plaintiff involving approximately forty separate transactions failed to satisfy due process). As stated, the significance placed on the frequency of such activity must depend, first and foremost, on the jurisdictional relevance of any one instance.8 *563The assertion that the defendant availed itself of the “benefits and protections” of Massachusetts by receiving seventy-nine invoices mailed from the Commonwealth at the plaintiff’s sole election and paying those that were uncontested does not withstand scrutiny.
The crucial due process defect in the plaintiff’s claim of jurisdiction is that it has not shown that the defendant benefited in any way from the protections of Massachusetts law. “Even if a defendant’s contacts with the forum are deemed voluntary, the purposeful availment prong of the jurisdictional test investigates whether the defendant benefitted from those contacts.” Phillips Exeter Academy v. Howard Phillips Fund, Inc., 196 F.3d 284, 292 (1st Cir. 1999) (concluding that purposeful availment was lacking where the defendant’s only pertinent contacts with the forum were remittance of annual payments to the plaintiff “and there [was] not so much as a hint that the [defendant] benefitted in any way from the protections of [forum State] law in making these payments”).
3. Policy considerations. It should be noted as well that assertion of jurisdiction under these circumstances, while ostensibly favorable to this particular Massachusetts plaintiff, is contrary to established legislative policy underlying our long-arm statute. See New Hampshire Ins. Guar. Assn. v. Markem Corp., 424 Mass. 344, 350 (1997) (“Potential buyers would be discouraged from dealing with our suppliers, if the kinds of contacts [the plaintiff] relies on here were sufficient to allow such purchasers to be hauled by Massachusetts vendors into Massachusetts courts”). See also Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 9 n.14 (1979) (interpreting § 3[a] of the long-arm statute to permit jurisdiction over all nonresident purchasers “would have promoted the unwanted result of discouraging foreign purchasers from dealing with resident sellers for fear of having to engage in litigation in distant courts”); Whittaker Corp. v. United Aircraft Corp., 482 F.2d at 1085 (“[T]he inter*564est of the forum in not discouraging foreign purchasers from dealing with resident sellers for fear of having to engage in litigation in distant courts undercuts” an interpretation of the long-arm statute permitting jurisdiction over everyone who enters into a manufacturing agreement with a resident of the forum); L & P Converters, Inc. v. H.M.S. Direct Mail Serv., Inc., 634 F. Supp. at 366 (defendant was a “classic passive purchaser” where it “ha[d] done nothing to participate in the Massachusetts economy beyond placing . . . [telephone] orders from New York”).
For these reasons I consider the characterization of this defendant as having had a presence in Massachusetts that satisfies due process fairness requirements to be incorrect, and altogether inconsistent with commercial reality. I respectfully dissent, and conclude the judgment below should be summarily affirmed.

In seeking to bolster its jurisdictional claim, the plaintiff claimed that the defendant resold some of the products it purchased from the plaintiff to CVS and that CVS, in turn, placed some of those products in its stores, including in Massachusetts. The judge found that allegation to be unsupported and, in any event, irrelevant to the jurisdictional issue.

The plaintiff characterizes the dealings between the parties as consisting of seventy-nine wholly separate contracts, while the defendant argues that there was only a single “forecast order” from which all of the invoices were generated. The defendant further notes that the prices for each item remained the same throughout the period encompassed by the plaintiff’s complaint. While I view the plaintiff’s argument as unrealistic and self-serving, it is to be considered true for purposes of deciding the motion to dismiss. Portraying each invoice as a separate contract, however, is irrelevant to determining whether the defendant availed itself of the benefit of “doing business” in Massachusetts. See infra.

Elements of a transaction that satisfy long-arm jurisdiction do not consequentially support the separate requirements of due process. Innumerable cases have found that a commercial relationship met conditions for the former but failed to satisfy the latter. See, e.g., REMF Corp. v. Miranda, 60 Mass. App. Ct. 905, 906-907 (2004); Bond Leather Co. v. Q.T. Shoe Mfg. Co., 764 F.2d 928, 933-935 (1st Cir. 1985); L&P Converters, Inc. v. H.M.S. Direct Mail Serv., Inc., 634 F. Supp. 365, 366 (D. Mass. 1986); Litchfield Financial Corp. v. Buyers Source Real Estate Group, 389 F. Supp. 2d 80, 88-89 (D. Mass. 2005).

Several of these decisions address the volume and financial value of business dealings in the context of our long-arm statute where the defendant was present in the State, but do not consider those factors with respect to due process. See, e.g., Carlson Corp. v. University of Vt., 380 Mass. 102, 105 (1980) (contract signing in Massachusetts “culmination of months of negotiations’’); Fairview Mach. & Tool Co. v. Oakbrook Intl., Inc., 56 F. Supp. 2d 134 (D. Mass. 1999).

The importance of a defendant’s intent is well expressed in United Elec., Radio & Mach. Wkrs. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1087 (1st Cir. 1992) (recognizing that the test is “whether the defendant attempted to participate in the commonwealth’s economic life” [emphasis added]). See Telco Communications, Inc. v. New Jersey State Firemen’s Mut. Benefit Assn., 41 Mass. App. Ct. 225, 230-231 (1996) (where the controversy centered in out-of-State activities, the defendant did not avail itself of the privilege of conducting business in Massachusetts).

Indeed, Diamond registered to do business in Massachusetts only after initiating this litigation. Even then, it registered only as a foreign corporation, which can explain the defendant’s assertion (irrelevant in any event to the question of availment) that, despite the return address on the plaintiff’s invoices, Schnur did not believe he was purchasing perfume from a Massachusetts business.

The assertion that technological advances of the past several decades require an expanding concept of “forum State activities” is misdirected here. Technology has rendered physical presence, previously an important factor to determine whether a party has entered the jurisdiction for long-arm analysis, less central to the definition of “doing business.” But this falls far short of a justification to dilute the due process protection of the Fourteenth Amendment where availment is wholly lacking. In any event, there is no claim in this case that the defendant utilized technology as a substitute for physical presence as, for example, maintaining a Web site accessible to Massachusetts residents. The purpose of the interstate communications, initiated not by the defendant but by the plaintiff, was simply billing and payment.

It is not disputed that the defendant merely responded to the plaintiff’s election to send invoices from Parker’s home and office in Newton rather than billing the defendant FOB or COD New Jersey, or COD New York. In order to satisfy due process requirements, the defendant’s contacts with the forum State must be voluntary —• that is, not based on the “unilateral activity of another party or a third person.” Burger King Corp. v. Rudzewicz, 471 U.S.
*563462, 475 (1985), quoting from Helicópteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417 (1984).
Likewise, the plaintiff could decide whether to bill monthly, sporadically, or on each occasion that goods were delivered. Frequent billing of an out-of-State party does not create jurisdiction any more than quarterly or sporadic billing necessarily defeats it.