SIKORA, J.
This appeal presents a question of the jurisdiction of the Massachusetts courts over a business corporation located exclusively in New York State. The plaintiff, Diamond Group, Inc. (Diamond), is a wholesale distributor of perfume products; its sole business location lies in Newton, Massachusetts. The
However, this appeal does not require a decision of that ultimate question. It requires instead the determination whether the Massachusetts courts have jurisdiction to entertain the claim. In response to Diamond's complaint, Selective moved under Mass.R.Civ.P. 12(b)(2), 365 Mass. 754 (1974), to dismiss for lack of personal jurisdiction or, alternatively, forum non conveniens. After supplementation of the allegations of the verified complaint by affidavits and appended exhibits by both parties, and after submission of extensive memoranda of law, a judge of the Superior Court concluded that Massachusetts courts lacked personal jurisdiction over Selective and entered judgment of dismissal. For the following reasons, we now reverse.
Background. These undisputed facts emerge from the verified complaint, the parties' affidavits, and their attached exhibits. Each of the corporate parties in this case is primarily a one-man enterprise. Diamond's president, chief executive officer, and sole shareholder is Jeffrey Parker. Selective's president and director is Dennis J. Schnur. Parker and Schnur had known each other since approximately 1993. Their current businesses had engaged in the purchase and sale of products since 2000.
Selective communicated all orders to Diamond's Newton office by electronic mail (e-mail), telephone, or facsimile (collectively, electronic orders). In response to each electronic order, Diamond prepared an appropriate invoice and assigned the request a purchase order number. Therefore, the seventy-nine invoices issued by Diamond during the twenty-one month period in question represented Selective's orders for seventy-nine purchases. Physical delivery of the products occurred from sites outside of Massachusetts to Selective's premises in Jericho, New York or to an alternate site in New Jersey.
From the verified complaint, affidavits, and attached exhibits, the motion judge concluded as follows:
Analysis. 1. Procedural and evidentiary matters. On a motion to dismiss for lack of personal jurisdiction pursuant to rule 12(b)(2), "the plaintiff[] bear[s] the burden of establishing sufficient facts on which to predicate jurisdiction over the defendant." Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. 1, 3 (1979). See Droukas v. Divers Training Academy, Inc., 375 Mass. 149, 151 (1978). For purposes of reviewing the ruling on the motion to dismiss, we accept as true assertions in the plaintiff's affidavit, including any which controvert assertions in the defendant's affidavit. See id. at 151 & n.2. In this instance, as noted, the material jurisdictional facts established by the affidavits are undisputed. The parties contest only their legal significance.
2. Personal jurisdiction over the defendant. The exercise of personal jurisdiction over a nonresident defendant requires compliance with both (a) the standards of the forum State's long-arm statute, and (b) the standards of the due process clause of the Fourteenth Amendment to the United States Constitution.
a. Long-arm statutory standard of G. L. c. 223A, § 3(a). Pursuant to G. L. c. 223A, § 3, as amended by St. 1969, c. 623,
Section 3(a) of the long-arm statute imposes two requirements: "the defendant must have transacted business in Massachusetts, and the plaintiff's claim must have arisen from the transaction of business by the defendant." Tatro, 416 Mass. at 767.
Our courts have interpreted the "transacting any business" clause of § 3(a) liberally, Tatro, supra at 767, and cases cited, and "to the limits" permitted by the United States Constitution. Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. at 6, citing "Automatic" Sprinkler Corp. of America v. Seneca Foods Corp., 361 Mass. 441, 443 (1972). Broad interpretation accords with the letter of the statute. It is axiomatic that every word will receive some effect; no word is redundant or ineffectual. See Negron v. Gordon, 373 Mass. 199, 205 (1977); Sperounes v. Farese, 449 Mass. 800, 807 (2007). The section uses the word "any" before the word "business." We interpret that term to be expansive, or to mean that the volume of business need not be substantial but merely definite and perceptible. See Foster-Miller, Inc. v. Babcock & Wilcox Canada, 848 F.Supp. 271, 276 (D. Mass. 1994) (any conduct beyond the "most incidental commercial contact" is sufficient). The test is whether the defendant engaged in the intentional or purposeful conduct of business activity in the Commonwealth. See Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. at 6, 11; Tatro, 416 Mass. at 767-768; United Elec., Radio & Mach. Wkrs. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1087 (1st Cir. 1992) (noting that courts look to "whether the defendant attempted to participate in the commonwealth's economic life").
Here, Selective has transacted business within the meaning of § 3(a). Over a period of years, the company engaged in an
The parties' course of dealing met also the second statutory requirement of § 3(a). The "arising from" clause of G. L. c. 223A, § 3, poses a "but for" test. Tatro, supra at 770-771. Here, "but for" Selective's purchase of inventory from Diamond and its breach of the integral duty of payment, Diamond would not have suffered injury.
A third consideration strengthens the reach of the statute. In Carlson Corp. v. University of Vt., 380 Mass. 102 (1980), the court reasoned that "where a contract is made in this State and a cause of action arises out of such contract, the consummation
As an arrangement for the purchase and sale of goods, the agreements here fell within the scope of art. 2 of the Uniform Commercial Code (UCC). See G. L. c. 106, § 2-102 ("[T]his Article applies to transactions in goods"). Pursuant to G. L. c. 106, § 2-206(1)(b), "an order or other offer to buy goods for prompt or current shipment shall be construed as inviting acceptance either by a prompt response to ship or by the prompt or current shipment of conforming or non-conforming goods." Diamond routinely accepted Selective's offers to buy by transmittal of an invoice acknowledging Selective's offer to purchase and effectively promising to ship. See Roto-Lith, Ltd. v. F.P. Bartlett & Co., 297 F.2d 497, 499 (1st Cir. 1962) (noting that under § 2-206 of the UCC, "mailing the acknowledgment would clearly have completed the contract in Massachusetts by acceptance had the acknowledgment not sought to introduce new terms").
Two weaknesses undermine the motion judge's analysis and conclusion that Selective's activity did not fall within the grasp of the long-arm statute. First, it focuses almost solely upon the facts demonstrating Selective's absence from Massachusetts and omits any reference to its positive business connection with the Commonwealth. It makes no mention of the seventy-nine purchase orders placed with Diamond in Massachusetts by electronic communication, the $995,692.35 value of the products delivered, or the payment of approximately $466,000 to Diamond for goods received. In short, it omits the undisputed fact that
The second flaw is the concentration on the lack of Selective's physical contacts with the Commonwealth. While Selective may not have entered the Commonwealth physically, it maintained an ongoing pattern of electronic contact with the Commonwealth by placing numerous telephone, facsimile, and e-mail orders for large quantities of products. As the Supreme Judicial Court observed almost thirty-five years ago, "Modern technology has taken us far beyond the point where two [persons] must stand in each other's physical presence to transact business. Widespread use of the telephone and the mails make[s] actual physical presence unnecessary in many cases." Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. at 11 (citation omitted). This statement applies all the more forcefully today as commercial activity proceeds far more dominantly by electronic communication.
b. Due process. For determination whether an exercise of personal jurisdiction satisfies due process, "the constitutional touchstone remains whether the defendant purposefully established `minimum contacts' in the forum State." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985). This analysis requires the plaintiff to demonstrate (1) purposeful availment of commercial activity in the forum State by the defendant; (2) the relation of the claim to the defendant's forum contacts; and (3) the compliance of the exercise of jurisdiction with "traditional notions of fair play and substantial justice." Bulldog Investors Gen. Partnership v. Secretary of the Commonwealth, 457 Mass. 210, 217 (2010), and cases cited. See Tatro, 416 Mass. at 772-773, and cases cited. The third element is essentially a test of fairness measuring (a) the burden upon the defendant of appearance in the forum State litigation; (b) the interest of the plaintiff in the availability of accessible adjudication of a grievance; and (c) the interest of the forum State in the provision of legal process to its residents. Bulldog Investors Gen. Partnership v. Secretary of the Commonwealth, supra at 218, citing Burger King Corp. v. Rudzewicz, supra at 467-477. See Tatro, 416 Mass. at 773.
With respect to the second requirement, as discussed above in
Finally, the exercise of jurisdiction over Selective does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted). First, the burden on Selective of appearance in court in an adjacent State from which it has acquired inventory and in which it has acquired a substantial debt is neither onerous nor surprising. Second, as a Massachusetts resident, Diamond is entitled to accessible legal process in the Commonwealth for assertion of its claim. Third, the Commonwealth has a "manifest interest" in providing a convenient forum to residents asserting good faith and objectively reasonable claims for relief. See Tatro, 416 Mass. at 773, citing Burger King Corp. v. Rudzewicz, supra at 473. In sum, the exercise of jurisdiction over Selective is neither unfair nor unreasonable. It complies with the requirements of G. L. c. 223A, § 3(a), and due process.
c. Vendor vs. purchaser distinction. Several cases express the concern that the exposure of nonresident purchasers to Massachusetts long-arm jurisdiction might operate oppressively and discourage out-of-State buyers from business activity with Commonwealth entities. See, e.g., Good Hope Indus., Inc. v. Ryder Scott Co., 378 Mass. at 9 n.14; New Hampshire Ins. Guar. Assn. v. Markem Corp., 424 Mass. 344, 349-350 (1997); Whittaker Corp. v. United Aircraft Corp., 482 F.2d 1079, 1085 (1st Cir. 1973). However, the exercise or rejection of jurisdiction on long-arm and due process grounds has depended not narrowly on the role of purchaser or vendor, but instead broadly on an evaluation of the nonresident's quantity and quality of contacts with the Commonwealth. The evaluation is intensely circumstantial. Good Hope Indus., Inc. v. Ryder Scott Co., supra at 2; Windsor v. Windsor, 45 Mass.App.Ct. 650, 652 (1998).
The cases typifying the rejection of jurisdiction have involved isolated or incidental purchases by a nonresident defendant. See, e.g., "Automatic" Sprinkler Corp. of America v. Seneca Foods Corp., 361 Mass. at 441 (purchase of a single machine from the plaintiff in Massachusetts); New Hampshire Ins. Guar. Assn. v. Markem Corp., 424 Mass. at 348-349 (purchase of
Decisions sustaining jurisdiction have assessed the volume and value of the nonresident purchaser's transactions or dealings. See Carlson Corp. v. University of Vt., 380 Mass. at 106-107 (single transaction of large value); Sonesta Intl. Hotels Corp. v. Central Fla. Invs., Inc., 47 Mass. App. Ct. at 160-163 (Massachusetts plaintiffs provided various marketing services to the defendant from Boston); Buctouche Fish Mkt., Ltd. v. City Sea Foods, Inc., 735 F. Supp. at 443 (nonresident defendant purchased large quantities of lobster from plaintiff); Fairview Mach. & Tool Co. v. Oakbrook Intl., Inc., 56 F. Supp. 2d at 136-137 (defendants contracted to purchase almost two million dollars worth of machinery from plaintiff).
In sum, under both statutory and constitutional standards, the duration, volume, and value of Selective's dealings negate the characterization of it as an "archetypal passive purchaser" unfairly hauled into the distant courts of the Commonwealth (dissent, post at 557, 560-562), and therefore likely to be discouraged from further engagement with Massachusetts suppliers (id. at 563-564). Seventy-nine purchase orders and resulting shipments establish Selective as an extraordinarily deliberate, regular, and active "passive purchaser." No precedent goes so far as to say that such a sustained course of transactions falls short of the quality and quantity of business activity required by the long-arm
3. Forum non conveniens issue. As a third, independent ground for dismissal, Selective argued below that a preexisting Federal lawsuit in the Southern District of New York constituted the convenient forum for decision of this dispute. Selective's argument is that the existing claims between the two parties in that case would necessarily resolve the dispute over payment asserted in the Massachusetts case.
Under G. L. c. 223A, § 5, "[w]hen the court finds that in the interest of substantial justice the action should be heard in another forum, the court may stay or dismiss the action in whole or in part on any conditions that may be just." The motion judge never reached the forum non conveniens issue because he decided the dismissal motion on the basis of jurisdiction.
Neither party has fully briefed the forum non conveniens issue for this appeal. Consequently, we do not reach it.
Conclusion. Selective is properly subject to personal jurisdiction
So ordered.
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
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.
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 was established.
It is worth repeating the judge's findings, already set forth in the majority opinion, as they have full support in the record:
Discussion. 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 Fourteenth Amendment due process requirements elaborated by the United States Supreme Court are lacking in this case.
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
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.
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
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 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.
The crucial due process defect in the plaintiff's claim of jurisdiction is that it has not shown that the defendant benefitted 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").
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 interest
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.
"From 2000 through early 2008, Diamond and Selective engaged in literally hundreds of transactions. During that period Diamond sometimes purchased products from Selective while other times Selective purchased product[s] from Diamond. Orders were usually placed by telephone, facsimile, or by e-mail."
Two considerations prevent our acceptance of that position. The first is the uncertain status of the Federal litigation at this moment. The second is the fact visible in our record that the Davidoff product (Cool Water) was only one of six sold by Diamond to Selective in the shipments disputed in the Massachusetts litigation. The unpaid invoices included in our record show the dollar value of the Davidoff product to approximate only thirty-eight percent of the value of the aggregate unpaid products. Selective's assertion that resolution of the Federal case could or would resolve the dispute over liability and damages in the Massachusetts case remains speculative on the present record. If that circumstance changes, the parties remain free to bring it to the attention of the Superior Court. That court remains free to exercise its discretion under G. L. c. 223A, § 5.
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.