Court Opinion

ID: 8927789
Source: CourtListenerOpinion
Date Created: 2022-11-27 06:49:51.012381+00
Date Added: 2024-06-11T17:09:26.821469
License: Public Domain

SWYGERT, Senior Circuit Judge,
concurring in the result.
In Lakeside Bridge & Steel Co. v. Mountain State Construction Co., 597 F.2d 596 (7th Cir.1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980), this court held that the mere negotiation, execution, and performance of a commercial contract between a plaintiff-Wisconsin merchant and a defendant-nonresident of Wisconsin — even though a purposeful act on the part of the defendant to assume some “contact” with Wisconsin, even though plaintiff performed the contract in Wisconsin, and even though both performance and an eventual lawsuit on the contract in that forum were foreseeable — were insufficient to establish minimum contacts between the nonresident defendant and Wisconsin. That case is controlling here. Accordingly, I cannot join the reasoning of the majority opinion, which finds personal jurisdiction here by distinguishing Lakeside. Because, however, I believe that Lakeside was wrongly decided and should be overruled, I concur in the result.
I
The majority distinguishes Lakeside by discerning an additional “contact” here: Santee Cooper’s solicitation of MCG’s business. Ante at 1202-1203. That solicitation consisted of a telephonic inquiry as to MCG’s interest in doing business with San-tee Cooper and reimbursement for the expenses of MCG’s representative to fly to Washington, D.C. to negotiate a contract. Placing a phone call to Wisconsin and flying a Wisconsin resident to Washington, D.C. are not activities conducted within Wisconsin. In order to satisfy the requirement of “some act by which defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws,” Lakeside, 597 F.2d at 600 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958)), such out-of-State activities must have sufficient in-State effects to be considered a “contact” with Wisconsin. See id. at 602 (quoting and discussing Restatement (Second) of Conflict of Laws § 50 (1971)). The most significant in-State effect of this solicitation was that it culminated in a $50,000 services contract that was substantially performed by MCG in Wisconsin. Yet this is precisely the kind of in-State effect that Lakeside held to be insufficient to establish personal jurisdiction.
It is true that solicitation has effects in the forum State apart from the ensuing contract. But here the only such in-State effect was to cause a Wisconsin resident to leave the State temporarily and to cause him and his company to invest time and effort into persuading Santee Cooper that it was worthy of a consulting contract. All of these costs incurred in reliance on the solicitation could be quantified, and surely the resulting figure would pale in comparison to the $50,000 contract. If the $50,000 contract is not a sufficient in-State effect, I *1206fail to see how the negligible collateral effects of the solicitation tip the scales in favor of jurisdiction.
The majority, however, discerns a qualitative difference between the contacts represented by the solicitation and those represented by the resulting contract. Unlike the “passive” defendant in Lakeside, the defendant here took the initiative by actively seeking out the business of a Wisconsin company. See ante at 1202-03. Such aggressiveness constitutes purposeful availment of the privilege of conducting activities within the forum State and somehow makes it “fair” to haul the defendant into the courts of the plaintiffs home State.
Such an argument seems both factually incorrect and legally irrelevant. In a commercial transaction between merchants of roughly comparable bargaining power, neither party truly can be defined as “passive.” That the defendant here made the first telephone call does not distinguish the nature of the instant commercial transaction from that in Lakeside.1 In both cases it can safely be assumed that the defendant was quite active in pursuing its own interests during the bargaining process. Furthermore, it is not clear why the relative aggressiveness of the defendant should be jurisdictionally relevant. The aggressiveness of the defendant does clearly indicate the defendant’s “purposefulness” in associating itself with a Wisconsin concern. But the assumption of a $50,000 contractual obligation is no less purposeful. Moreover, Lakeside holds that the decision to do business with a Wisconsin company — however purposeful — is not sufficient to establish the requisite minimum contacts with Wisconsin. This decision to do business is not in itself an activity conducted within Wisconsin. See Lakeside, 597 F.2d at 603. Here, as in Lakeside, the only activity conducted within Wisconsin is the plaintiff’s unilateral decision to perform the contract in Wisconsin. The “unilateral activity of [one] who claim[s] some relationship with a nonresident defendant ... cannot satisfy the requirement of a contact with the forum State.” Id. (quoting Hanson v. Denckla, 357 U.S. at 253, 78 S.Ct. at 1240 (1958)).
In short, the defendant’s aggressive solicitation of MCG’s business does not provide a contact with Wisconsin that is quali-. tatively different from that provided by the contract. Both the solicitation and the decision to contract took place outside Wisconsin.2 Ultimately the only link with Wisconsin, both here and in Lakeside, is the plaintiff’s unilateral decision to perform the contract in Wisconsin. Although it can be argued that the solicitation and the decision to contract caused important in-State effects — the performance of the contract in Wisconsin — the Lakeside decision express*1207ly repudiated this argument. See Lakeside, 597 F.2d at 603.3
To be sure, the Supreme Court has indicated that solicitation conducted out-of-State, through the interstate mails, can be jurisdietionally significant under some circumstances. See ante at 1202. In McGee v. International Life Insurance Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), the Court upheld California’s exercise of jurisdiction over the defendant-Texas insurer where the insurer sought a commercial benefit in California by soliciting through the mails the plaintiff-consumer’s business. See also Kulko, 436 U.S. at 97, 98 S.Ct. at 1699 (discussing McGee). But the Lakeside court found McGee inapposite in the nonconsumer context. The contact with the forum State in McGee may be ascribed to the forum State’s special interest in regulating the solicitation and performance of insurance contracts with resident consumers who lack bargaining power. See Lakeside, 597 F.2d at 600 & nn. 5, 6.4
Although the majority emphasizes that its finding of personal jurisdiction does not rest exclusively on Santee Cooper’s solicitation activities, see ante at 1203, the three other proposed “contacts” do not suffice to establish jurisdiction. These three contacts are (1) the performance of the contract in Wisconsin, ante at 1203-04; (2) the “inconvenience that might result if plaintiff were compelled to bring this suit in some other forum,” ante at 1204, 1204-05; and (3) the interest of the forum in the controversy, ante at 1205.
Neither the first nor the third factor distinguishes the case at bar from Lakeside. The majority concedes that the first factor was also present, and disavowed, in Lakeside. See ante at 1203. As for the interest of the forum State in the controversy, both Lakeside and the present case arose from a breach of contract action initiated by a Wisconsin merchant against a nonresident corporation. The interest of the forum State in the controversy is therefore identical in both cases and cannot be used to distinguish Lakeside from the instant case.
As for the second proposed contact, the majority acknowledges that the balance of conveniences is not a concern of primary importance. Ante at 1204. The Supreme Court has indicated that even if the defendant would suffer no inconvenience, “The Due Process Clause ‘does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations.’ International Shoe Co. v. Washington, supra, [326 U.S.] at 319 [66 S.Ct. at 160].” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294, 100 S.Ct. 559, 565, 62 L.Ed.2d *1208490 (1980).5 Lakeside requires that we find no jurisdictionally cognizable contacts here because the only relation between the defendant and the forum State is the unilateral decision of the plaintiff to perform the contract in Wisconsin. Lakeside, 597 F.2d at 603. Because there are no contacts here, World-Wide Volkswagen requires us to conclude, in turn, that there can be no jurisdiction regardless of the balance of conveniences.
In sum, there are no legally significant factual distinctions between this case and Lakeside. Unless we choose to overrule Lakeside, that case must be considered controlling here.
II
Unlike the majority, see ante at 1201, n. 16, I would reach the issue of whether Lakeside should be overruled. Because I believe that it should, I concur that the Wisconsin federal district court could constitutionally exercise jurisdiction over the defendants.
The Lakeside holding is premised on the assumption that performance of the contract by the plaintiff in the forum State is a unilateral act of one who claims some relation with the nonresident defendant. Lakeside, 597 F.2d at 603. The plaintiffs performance of a contractual obligation exacted by the defendant in return for consideration can hardly be considered unilateral. Although the contract may not require the plaintiff to perform in the forum State, in both the present case and in Lakeside the contract causes such performance. By requiring the tender of goods or services within a period of time that did not allow the plaintiff any choice other than to perform the contract substantially in Wisconsin, the Lakeside defendants and the instant defendants were responsible for activities in the forum State that inured to their benefit: the performance of the contract.
Furthermore, because the defendant causes the plaintiff to act for the defendant’s benefit in the forum State, the plaintiff should be deemed as acting as the agent of defendant rather than as acting unilaterally. As such, the plaintiff’s action in the forum State should be attributable to the defendant. See generally 4 C. Wright & A. Miller, Federal Practice & Procedure § 1069 (1969) (activities within the forum State of agents of nonresident corporation may suffice to establish jurisdiction).
*1209When the causal connection between the defendant’s out-of-State activities and the plaintiff’s activities within the forum State is too attenuated, the in-State activities will be considered as unilateral and as not giving rise to personal jurisdiction. Cf. Comment, Constitutional Limitations on State Long Arm Jurisdiction, 49 U.Chi.L. Rev. 156, 164-68 (1982) (identifying causation as a key requirement of due process). Thus, in World-Wide Volkswagen, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490, the New York defendant caused the Oklahoma car accident in the sense that it sold the car to the plaintiff-driver. Addressing the causality issue under the rubric of “foreseeability,” the Court held that the relationship between the out-of-State acts and the inState events was so attentuated that the out-of-State defendant could not have “reasonably anticipate[d] being haled into [Oklahoma] court.” Id. at 297, 100 S.Ct. at 567.
In the case at bar, the causal connection between the out-of-State and in-State acts is not similarly attenuated. Unlike World-Wide Volkswagen, the out-of-State act here — the contract — is the direct cause of the in-State activity — contract performance. Furthermore, when a South Carolina defendant contracts with a Wisconsin merchant and when it is undisputed that both parties contemplate substantial performance in Wisconsin, the South Carolina defendant can reasonably anticipate being haled into Wisconsin court for breaching that same contract.
Nothing in the policies underlying International Shoe militates against granting personal jurisdiction on the basis of a contract. As for federalism concerns, Wisconsin has a compelling interest in offering its residents legal avenues for enforcing contracts with nonresidents. It is true that the forum State in World-Wide Volkswagen had an equally compelling interest in policing against unsafe automobiles.6 What distinguishes the two cases is the unfairness of a State extending its sovereign power to pursue such compelling interests to nonresidents who have eschewed all connection with that State. In World-Wide Volkswagen, the Court found it unfair to allow Oklahoma to exert jurisdiction over a defendant who sought to confine its operations to New York and the tristate area:
The Due Process Clause, by ensuring the “orderly administration of the laws,” International Shoe Co. v. Washington, 326 U.S. at 319 [66 S.Ct. at 160], gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.
World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. Here, the defendant deliberately extended its operation to Wisconsin by contracting with a Wisconsin merchant.
As for the “traditional notions of fair play and substantial justice” that underlie minimum contacts analysis, International Shoe, 326 U.S. at 316, 66 S.Ct. at 158, it is difficult to see how a sophisticated merchant who enters interstate commerce by contracting with an out-of-State merchant can be the victim of fundamental unfairness by virtue of the court’s decision to grant jurisdiction solely on the basis of that contract. Such a rule would merely force the defendant-merchant to internalize one of the costs of doing business across State lines: defending a lawsuit in the home State of the other party to the contract.7 This is not a case in which gross inequities *1210in bargaining power and resources, such as where the defendant is a consumer who places an order with a large mail-order house based in another State, should give us pause before finding jurisdiction to be in accord with fundamental fairness. See Currie, supra, 1963 U.Ill.L.F. at 574-77 (unfair to permit mail-order house to bring suit on small claims in its home State); see also supra note 4.
Finally, although I agree that the minimum contacts analysis must be “fact intensive,” see ante at 1199, the Supreme Court has also indicated that the due process clause requires that our decisions “give a degree of predictability to the legal system,” see World-Wide Volkswagen, 444 U.S. at 297, 100 S.Ct. at 567. I believe that overruling Lakeside would serve this latter policy. At present, this court follows what one commentator characterizes as the “contract plus” doctrine. Note, Long-Arm Jurisdiction in Commercial Litigation: When is a Contract a Contract?, 61 B.U. L.Rev. 375, 388-89 (1981). A contract is not itself sufficient to confer jurisdiction, but when some other factor is added — such as a brief visit to the forum State to complete the deal, see supra note 2 — the requisite threshold level of contacts is reached. The problem is that these additional items have little real significance when compared to the often large contracts involved. One suspects that despite its announced rule, this court considers contracts to be quite a significant contact and employs the various “plus” factors as the make-weight necessary to reach the result of finding jurisdiction. But where such make-weight factors are unavailable, the court is constrained to follow Lakeside. E.g., Jadair, Inc. v. Walt Keeler Co., Inc., 679 F.2d 131 (7th Cir.), cert. denied, 459 U.S. 944, 103 S.Ct. 258, 74 L.Ed.2d 201 (1982). This lends a certain capriciousness to the law. Covert tools are bad tools,8 and to the extent we can clarify the underlying reasons for our decisions, we make the law more predictable.
Accordingly, I would overrule Lakeside. I would hold that where, in the absence of gross inequities in bargaining power, two merchants contract for the sale of goods or services, the forum State may exercise jurisdiction over the defendant-merchant, if (1) the plaintiff-merchant’s cause of action is based on the contract, (2) plaintiff’s substantial performance of the contract in the forum State is reasonably contemplated by the defendant at the time of the contract, and (3) the contract is substantially performed in the forum State by the plaintiff. I therefore concur with the judgment that the district court erred in dismissing the instant action for want of personal jurisdiction and that the cause should be remanded for further proceedings.

. The majority notes that the defendant’s solicitation efforts included not just a telephone call initiating negotiations between the parties, but also its inducement of "an MCG partner to travel cross-country to discuss the potential contract, all completely at Santee Cooper’s expense.” Ante at 1203. The Supreme Court in Kulko v. Superior Court of California, 436 U.S. 84, 98 S.Ct. 1690, 56 L.Ed.2d 132 (1978), indicated that this latter consideration bears no jurisdictional significance. The defendant in Kulko consented to his daughter's wishes to move from New York to California and paid her airfare. The Court found that California could not constitutionally exert jurisdiction over the New York defendant and rejected the California court’s reasoning that the purposeful act required by Hanson v. Denckla was defendant's “‘actively and fully consent[ing] to lisa [his daughter] living in California for the school year ... and ... sendfing] her to California for that purpose.’ 19 Cal.3d [514], at 524 [138 Cal. Rptr. 586 at 591], 564 P.2d [353], at 358." Kulko, 436 U.S. at 94, 98 S.Ct. at 1698.

. On three occasions, this court has deemed solicitation to be of sufficient jurisdictional significance to merit a different result from that in Lakeside. In all three cases, however, the solicitation and contract negotiation took place inside the forum State. Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209 (7th Cir.1984); Neiman v. Rudolf Wolff & Co., 619 F.2d 1189 (7th Cir.), cert. denied, 449 U.S. 920, 101 S.Ct. 319, 66 L.Ed.2d 148 (1980); Wisconsin Electrical Manufacturing Co., Inc. v. Pennant Products, 619 F.2d 676 (7th Cir.1980). Because the solicitation and contract negotiation in the case at bar did not take place in the forum State, the exception to the Lakeside rule created by these three cases is not apposite.

. The majority also attempts to find a qualitative difference between solicitation and the contract by downplaying the latter as "no more than the final link in a long transactional chain connecting the parties.” Ante, at 1203. Yet, solicitation, which has no' legal ramifications, seems insignificant in comparison to the “final link” of ordering goods, which has the comparatively draconian legal effect of allowing the plaintiff to invoke the coercive power of government to enforce the bargain. In any event, whatever commercial significance the solicitation may have for the relationship between the parties, what ultimately concerns us here is the relationship between the forum and the defendant. Because the solicitation did not have any significant in-State effects, it is jurisdietionally irrelevant.

. A commercial contract might be analogous to the insurance contract in McGee if the commercial contract resulted from a similar imbalance of bargaining power. That is, if an out-of-State defendant used its strong bargaining position to extort a hard bargain from the resident plaintiff and then sought to further exploit the plaintiff by forcing it to litigate in a distant State in order to obtain legal relief, perhaps such commercial exploitation might be considered a sufficiently harmful in-State effect to justify jurisdiction. Cf. Burger King Corp. v. Macshara, 724 F.2d 1505, 1512 (11th Cir.) (in light of the disparity in bargaining power between franchisor and franchisee, “this is one of those cases where ‘there is something to the notion that a party who has gone into a foreign State to do business with one of its residents can be expected to go back to bring suit.’ [Currie, The Growth of the Long Arm: Eight Years of Extended Jurisdiction in Illinois, 1963 U.Ill.L.Forum 533, 574.]”), appeal pending, — U.S. —, 105 S.Ct. 77, 83 L.Ed.2d 25 (1984). There is no indication in the case at bar that the plaintiff suffered from any inequity in bargaining power.

. I am not as confident as the majority that the Supreme Court has "abandoned" federalism as a concern in determining personal jurisdiction. See ante at 1198-99 (citing Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982)). The minimum contacts issue was a collateral concern in the Insurance Corp. of Ireland case, and, as the majority concedes, the Court emphasized that its holding did not alter the minimum contacts requirement. See ante at 1198-99.
Moreover, the Court could not abandon federalism concerns without overruling International Shoe. That case defined due process to include not just fairness in terms of the convenience to the defendant, but also "the fair and orderly administration of the laws which it was the purpose of the due process clause to insure." International Shoe, 326 U.S. at 319, 66 S.Ct. at 160. The unfairness proscribed by International Shoe is not simply the cost of defending a lawsuit in a distant forum, but “the unfairness, as it is conceived, of being compelled to defend ... [oneself] in a court of a State which ... [one] has no relevant connection.” Currie, The Growth of the Long Arm: Eight Years of Extended Jurisdiction in Illinois, 1963 U.I11.L.F. 533, 534. That is, the unfairness at issue is that of being subject to the coercive power of a foreign State, and to be hauled before its courts without any prior connection with its laws, politics, or economy. Indeed, if State sovereignty were not a fundamental concern, then personal jurisdiction would vary with the proximity of the forum State to the defendant, and cases involving federal question jurisdiction would not escape minimum contacts scrutiny. Currie, supra, 1963 U.Ill.L.F. at 534; cf. Redish, Due Process, Federalism, and Personal Jurisdiction: A Theoretical Evaluation, 75 Nw.U.L.Rev. 1112 (1980) (arguing that federalism is a key component in the jurisprudence of International Shoe, but concluding that federalism should not be a part of due process analysis).
In short, the abandonment of federalism would be an abandonment of International Shoe. I do not believe that the Supreme Court intended to overrule forty years of jurisprudence in a footnote in a case that was only collaterally concerned with the minimum contacts issue.

. That the plaintiffs in World-Wide Volkswagen were not residents of Oklahoma is immaterial for due process analysis because distinctions between residents and nonresidents in this context would be both arbitrary and violative of the privileges and immunities clause. Brilmayer, How Contacts Count: Due Process Limitations on State Court Jurisdiction, 1980 Sup.Ct.Rev. 77, 86-87.

. To an extent, this argument cuts both ways. Absent any transaction costs, it would be just as fair, if we can define "fair" to mean "efficient,” to force the plaintiff, not the defendant, to internalize such costs. See Coase, The Problem of Social Cost, 3 J.Law & Econ. 1 (1960). In addition, while it is often stated that modern economic developments make it easier both to engage in interstate commerce and to defend suits *1210in foreign States, e.g., McGee v. International Life Ins. Co., 355 U.S. 220, 222-23, 78 S.Ct. 199, 200-01, 2 L.Ed.2d 223 (1957), these same developments make it equally easy for the plaintiff to sue the defendant in the defendant's home forum. Brilmayer, supra, 1980 Sup.Ct.Rev. at 111.
Nevertheless, jurisdictional doctrine requires us to focus on the fairness to the defendant. If it is equally fair to place the burden on the defendant or the plaintiff, then we must place the burden on the defendant. For, having concluded that fundamental fairness is indifferent as to which party bears the cost, we can hardly conclude that it is fundamentally unfair to place the burden on the defendant.

. See Llewellyn, Book Review, 52 Harv.L.Rev. 700, 703 (1939).