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Maryland Does Not Have Personal Jurisdiction Over Brazilian Company in Breach of Contract Action
Purdue Holdings, Inc. v. BRF S.A.
SUMMARY: Although contract between Maryland company and Brazilian company had Maryland choice of law clause, there was no personal jurisdiction over the Defendant in Maryland where: 1) contract was not negotiated or formed in Maryland; 2) Plaintiff initiated relationship; 3) Defendant had no continuing obligation in Maryland; 4) the alleged breach took place outside of Maryland; 5) the contract involved Defendant’s promise to refrain from business activities in Maryland, and 6) Defendant only had intermittent contact with Maryland unrelated to the breach of contract action.
In Purdue Holdings, Inc. v. BRF S.A., No. JKB-14-1007 (D. Md., September 19, 2014), the Court granted the Defendant’s Motion to Dismiss for Lack of Personal Jurisdiction, in a breach of contract case. Purdue Holdings, Inc. (“Purdue”), a wholly-owned subsidiary of an international poultry producer, headquartered in Maryland, sued Defendant, an international food company and exporter of poultry meats, which was headquartered in Brazil. To sell their poultry products, Plaintiff uses the mark “PERDUE” and Defendant uses the mark “PERDIX.” The parties formed an agreement, which included promises by both sides not to use and/or register their respective marks in competing territories. Plaintiff agreed not to use and/or register its mark in Brazil, and Defendant agreed not to use and/or register its mark anywhere else in the world. The Agreement selects Maryland law in its choice-of-law provision, but does not contain a forum selection clause. Plaintiff executed the Agreement from Maryland, and Defendant executed the Agreement from Brazil.
Plaintiff filed a Complaint against Defendant, alleging that Defendant breached the Agreement by pursuing applications for trademark registrations in several countries, and further breached the agreement by refusing to abandon trademark registrations in several other countries. Defendant filed a motion to dismiss for lack of personal jurisdiction.
As a threshold matter, there was no general jurisdiction over the Defendant as there was no allegation of any continuous or systemic contact. Therefore, the Court’s analysis was whether it had specific jurisdiction over Defendant in relation to the particular claims in the case. Here, Plaintiff failed to make the requisite prima facie showing of personal jurisdiction under the three (3) factors from Consulting Engineers Corp. v. Geometric Ltd., 561 F.3d 273, 278 (4th Cir. 2009): (1) the extent to which the defendant purposefully availed itself of the privilege of conducting activities in the State; (2) whether the plaintiff’s claims arise out of those activities directed at the State; and (3) whether the exercise of personal jurisdiction would be constitutionally reasonable.
First, the Plaintiff, rather than the non-resident Defendant, initiated the contractual relationship.
Second, there were no continuing obligations owed by Defendant to Plaintiff in the forum state relating to the contract. Third, Plaintiff alleged that Defendant’s alleged breach of the agreement caused injury to Plaintiff at its corporate headquarters in Maryland, however, the so-called “Effects Test” has only been applied in intentional tort cases—not in breach of contract cases.
Fourth, while the agreement contained a Maryland choice-of-law clause, the Court did not find this factor sufficient to carry the day, particularly where the Defendant had not invoked the choice-of-law provision. Fifth, while the Plaintiff had intermittently ordered poultry from Defendant over the past several years, and Defendant had sent invoices to Plaintiff in Maryland, this was also insufficient to exercise personal jurisdiction over the Defendant because these transactions had no connection to the contractual dispute. Finally, the Court found that it lacked specific personal jurisdiction over the Defendant because: (1) the contract was not negotiated or formed in Maryland; (2) the agreement amounted to a promise that Defendant would refrain from business activities in Maryland; and (3) the alleged breach took place outside of Maryland.
The Court observed that the Plaintiff’s attempts to pursue international litigation in a variety of forums would be cumbersome, however, Plaintiff’s inconvenience alone did not justify the Court’s assertion of personal jurisdiction. Plaintiff failed to make a prima facie showing of personal jurisdiction under the first prong of the personal jurisdiction test—purposeful availment. Without these minimum contacts, the Court did not reach into a deeper analysis of the second and third prongs of the test. Therefore, the Court granted the Defendant’s Motion to Dismiss.
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