Perdue Foods LLC v. BRF S.A.

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
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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
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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.
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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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