SELYA, Circuit Judge.
This bi-coastal commercial dispute requires us to test the outer limits of a court's in personam jurisdiction, consistent with the constraints of the Due Process Clause.
Baskin-Robbins Franchising LLC (Baskin-Robbins) is a Delaware special purpose limited liability company, which maintains its principal place of business in Canton, Massachusetts. It franchises independent persons and entities to operate ice cream stores. Alpenrose Dairy, Inc. (Alpenrose) is a dairy products manufacturer incorporated in Oregon and headquartered in Portland.
In 1965, Baskin-Robbins' predecessor in interest, Baskin-Robbins Inc. entered into a territorial franchise agreement (the Agreement) with Alpenrose. At the time, Baskin-Robbins Inc. had its principal place of business in Glendale, California. The negotiations surrounding the formation of When consummated, the Agreement in California. When consummated, the Agreement gave Alpenrose the right to operate Baskin-Robbins franchises in Washington and Oregon for a six-year term, commencing on December 9, 1965. Subject to other conditions not relevant here, the Agreement gave Alpenrose an option to renew the franchise for successive six-year terms as long as it also furnished written notice to Baskin-Robbins at least one year prior to the expiration of the current term.
The Agreement obligated Alpenrose to comply with Baskin-Robbins' ever-changing specifications, recipes, and processes for the manufacture of ice cream products. It likewise bound Alpenrose to a set of specific procedures for operating Baskin-Robbins stores. These obligations required Alpenrose to have a certain amount of ongoing communication and coordination with Baskin-Robbins.
As might be expected, the Agreement controlled the financial relationship between the parties. It required Alpenrose to pay royalties to Baskin-Robbins based on monthly sales. The money stream flowed in both directions: Alpenrose recruited other franchisees for Baskin-Robbins, and the Agreement obligated Baskin-Robbins to make monthly remittances to Alpenrose based on royalties received by Baskin-Robbins from those franchisees.
Between 1973 and 1985, the parties amended the Agreement three times. These amendments expanded Alpenrose's franchise territory to include Montana and parts of Idaho. At the time of each amendment, Baskin-Robbins remained headquartered in California. All material discussions and negotiations concerning the amendments took place in Oregon (Alpenrose's home state).
Alpenrose exercised its renewal options without incident on five occasions. Throughout this decades-long period, Baskin-Robbins
In 2001 (as it had done every six years since 1965), Alpenrose sent Baskin-Robbins formal notice of its election to renew the Agreement. Alpenrose directed this notice to Baskin-Robbins' newly relocated headquarters in Massachusetts. The Agreement was thus extended for yet another six-year term.
In 2006, the ownership of Baskin-Robbins' parent company again changed hands.
Under the provisions of the Agreement, Alpenrose had until December 8, 2013 to notify Baskin-Robbins of its intent to renew for a further six-year term. On December 2, 2013, Alpenrose informed Baskin-Robbins that it did not intend to renew the Agreement, stating: "[P]lease consider this our one year notice of intent to not renew.... [M]aybe it's time to take a slightly different direction." Baskin-Robbins did not formally acknowledge that the Agreement would lapse, but the parties began negotiating the terms of Alpenrose's transition out of the franchise arrangement. The negotiations stalled and, on July 22, 2014, Alpenrose wrote to Baskin-Robbins, stating that it wished to "revoke" its decision not to renew. Instead, it requested another six-year extension of the Agreement, to begin when the current term expired (that is, on December 8, 2014). Alpenrose later warned that it would otherwise be entitled to fair compensation under the Washington Franchise Investment Protection Act,
Baskin-Robbins responded that Alpenrose had waited too long and was no longer entitled to renew the Agreement. At the same time, it rejected Alpenrose's suggestion that any compensation was due in consequence of the non-renewal of the franchise. Then — with an impasse in the offing — Baskin-Robbins raced to the United States District Court for the District of Massachusetts and sued for a judicial declaration that "the [Agreement] and all of Alpenrose's rights associated therewith will expire on December 8, 2014," and that "Alpenrose is not entitled to any compensation in connection with the expiration of the [Agreement]." The record sheds no light on the current status of the parties' commercial relationship.
Alpenrose moved to dismiss for lack of personal jurisdiction and improper venue,
This timely appeal followed.
"Where, as here, a district court dismisses a case for lack of personal jurisdiction based on the prima facie record, rather than after an evidentiary hearing or factual findings, our review is de novo."
The plaintiff has the burden of establishing that jurisdiction over the defendant lies in the forum state.
For the purpose of examining the merits of such a jurisdictional proffer, we — like the district court — take the facts from the pleadings and whatever supplemental filings (such as affidavits) are contained in the record, giving credence to the plaintiff's version of genuinely contested facts.
The case before us is a diversity case.
The jurisdictional requirements imposed by the Massachusetts long-arm statute are quite similar to, though not completely congruent with, the jurisdictional requirements imposed by the Due Process Clause.
Consistent with the demands of due process, a federal district court may exercise either general or specific jurisdiction over a defendant.
Specific jurisdiction allows a court to hear a particular case as long as "that case relates sufficiently to, or arises from, a significant subset of contacts between the defendant and the forum."
Under this framework, the first element is relatedness. Relatedness requires that "the action ... directly arise out of the specific contacts between the defendant and the forum state."
Baskin-Robbins argues that its claims arise from Alpenrose's letters to Baskin-Robbins in 2013 and 2014, both of which were sent to Baskin-Robbins' offices in Massachusetts. The first letter communicated Alpenrose's decision not to renew the Agreement; the second letter constituted Alpenrose's attempt to reverse direction by revoking that decision and exercising its option to renew the Agreement for another six years.
In its complaint, Baskin-Robbins seeks declarations both that Alpenrose's second letter did not effectively renew the Agreement (with the result that the Agreement expired on December 8, 2014) and that Alpenrose is not entitled to any compensation in connection with the expiration of the Agreement. We agree with Baskin-Robbins that these claims arise directly
Our conclusion is not altered by Alpenrose's asseveration that "the question of expiration arises first out of the [Agreement] itself" and "[i]t is only in the context of the [Agreement] itself that the two letters relating to expiration can be analyzed." Although it is transparently clear that the Agreement itself ultimately determines the effect of Alpenrose's two letters (that is, whether those letters collectively resulted in renewal of the Agreement), it is the letters that set the present controversy in motion. That creates a sufficient nexus between Alpenrose's letters and Baskin-Robbins' claims to satisfy the flexible and relaxed standard for relatedness.
This brings us to the next element of the jurisdictional analysis: purposeful availment. The purposeful availment inquiry asks whether a defendant has "deliberately target[ed] its behavior toward the society or economy of a particular forum [such that] the forum should have the power to subject the defendant to judgment regarding that behavior."
The main ingredients of purposeful availment are voluntariness and foreseeability.
It is apodictic that "the mere existence of a contractual relationship between an out-of-state defendant and an in-state plaintiff does not suffice, in and of itself, to establish jurisdiction in the plaintiff's home state."
Given the parties' franchisor-franchisee relationship, the logical starting point is the Supreme Court's seminal decision in
In finding that Florida could constitutionally exercise in personam jurisdiction over the franchisee, the Court relied heavily on the contractual documents, which specified "that Burger King's operations are conducted and supervised from the Miami headquarters, that all relevant notices and payments must be sent there, and that the agreements were made in and enforced from Miami."
To be sure, the case at hand also involves a suit by a franchisor that is trying to hail a franchisee into a court in its home state. But the similarity to
We add, moreover, that the franchisee's contacts with Burger King in Florida were foreseeable precisely because Burger King was located in Florida when the franchise agreement materialized. Not so here: when Alpenrose and Baskin-Robbins joined forces in 1965, Baskin-Robbins was headquartered in California and that state had been the locus of the negotiations that led up to the franchise agreement. Baskin-Robbins remained in California while the
We turn next to the 2001 and 2007 renewal notices, both of which were sent by Alpenrose to Baskin-Robbins in Massachusetts. It must be recalled, however, that these notices were mailed into Massachusetts only because Baskin-Robbins chose to relocate there some thirty-three years into the parties' contractual relationship. The right to renew was embedded in the Agreement from its inception, and the record contains no evidence that Alpenrose reached out to Massachusetts to solicit that right. The mere fact that Alpenrose exercised a previously granted right by mailing a notice into Massachusetts is insufficient, in itself, to ground a claim that a party has deliberately targeted its behavior toward the economy of Massachusetts.
Here, however, Baskin-Robbins' unilateral decision to move to Massachusetts does not stand alone. Baskin-Robbins' position is bolstered by a set of physical contacts between Alpenrose and Massachusetts. In 2006, Alpenrose's co-president, Rod Birkland, journeyed to Massachusetts and paid a courtesy visit to Baskin-Robbins' new owners. Even though such a single, isolated trip by a defendant to the forum state ordinarily would carry little or no weight in the minimum contacts calculus,
While in Massachusetts, Baskin-Robbins has maintained a Brand Advisory Council (BAC), which is comprised of approximately eight representatives from the franchisee community. The BAC meets quarterly. Between 2011 and 2014, Kim Birkland, Alpenrose's director of franchise relations, traveled to Baskin-Robbins' Massachusetts headquarters at least twice to attend these meetings. Moreover, Baskin-Robbins has identified three additional sets of contacts: royalty payments sent by Alpenrose each month to Baskin-Robbins in Massachusetts; remittance payments sent each month by Baskin-Robbins to Alpenrose from its Massachusetts headquarters; and Baskin-Robbins' performance of a compendium of services in Massachusetts to Alpenrose's behoof. These services include product testing, processing of customer complaints, and product supply planning.
Viewed in isolation, the payment flows between Alpenrose and Baskin-Robbins are suggestive, though perhaps inconclusive. Although courts have found the sending of occasional payments into the forum state to lack any "decretory significance" in the jurisdictional calculus,
The sockdolager, in this instance, is Baskin-Robbins' performance of services in Massachusetts on Alpenrose's behalf. Baskin-Robbins persuasively asserts that its performance of such services places this case squarely within the rubric of in-forum service contract cases, in which a finding of purposeful availment is typically based, in part, on the defendant's anticipation that the plaintiff will provide in-forum services and the plaintiff's provision of those in-forum services.
By twice renewing its Agreement with Baskin-Robbins, Alpenrose knowingly caused Baskin-Robbins to undertake in Massachusetts a plethora of activities on its behalf. To illustrate, as part of Baskin-Robbins' quality assurance process, Alpenrose delivered samples of its various ice cream flavors to Baskin-Robbins' Massachusetts headquarters four times each year, commencing in 2003. Once Baskin-Robbins finished testing the samples in Massachusetts, a Baskin-Robbins manager would communicate the results to Alpenrose. More extensive conversations ensued whenever any of the samples required improvement. Given the steady stream of samples sent by Alpenrose to Baskin-Robbins' Massachusetts redoubt, Alpenrose can hardly claim that it was unforeseeable that Baskin-Robbins was continually performing product testing on its behalf in Massachusetts.
Baskin-Robbins' performance under the Agreement encompassed a range of other Massachusetts activities as well. It maintained a customer service department at its Massachusetts headquarters, where customers across the country could report complaints about any Baskin-Robbins store (including those stores operated, directly or indirectly, under the aegis of Alpenrose). A Baskin-Robbins representative would then liaise with her Alpenrose counterpart regarding any complaints that originated in Alpenrose's territory.
So, too, Baskin-Robbins — from its Massachusetts headquarters — coordinated with Alpenrose on a wide variety of operational issues. Such issues included franchisee openings, the shuttering of particular stores, franchise transfers, and supply planning for the wide assortment of ice cream flavors sold by the stores. These communications occurred regularly (at a minimum, monthly), and the record reveals that on many occasions the communications regarding such operational functions were either carried out or facilitated by Baskin-Robbins employees situated in Massachusetts.
The short of it is that Baskin-Robbins' performance of these manifold activities — most of which Alpenrose irrefutably knew were taking place in Massachusetts — was vital to the continuation of the franchisor-franchisee relationship. To this extent, Alpenrose deliberately targeted the Massachusetts economy and reasonably should have foreseen that, if a controversy developed, it might be haled into a Massachusetts court. Thus, we conclude that Alpenrose's contacts with Massachusetts crossed the purposeful availment threshold. Put another way, Alpenrose's contacts were scarcely so "random, fortuitous, or attenuated"
There is one last leg to our journey. We must assess the extent to which the exercise of jurisdiction over Alpenrose is fair and reasonable. This analysis implicates five factors, which we have dubbed the Gestalt factors.
To begin, Alpenrose insists that it would be burdensome to defend itself in Massachusetts. But we are not dealing here with relative convenience: our case law makes pellucid that "this factor is only meaningful where a party can demonstrate some kind of special or unusual burden."
The second factor — Massachusetts' interest in adjudicating this dispute — cuts in favor of Baskin-Robbins. As the Supreme Court has explained, "[a] State generally has a `manifest interest' in providing its resident with a convenient forum for redressing injuries inflicted by out-of-state actors."
On this point, we reject Alpenrose's argument that Massachusetts has only a "mild" interest because "the dispute concerns [an Agreement] negotiated and executed in California, calling for performance in Washington, Oregon, Idaho, and Montana, and looking to Washington law." This argument fails because it conveniently overlooks the fact that the nature of the franchisor-franchisee relationship necessitated Baskin-Robbins' performance of substantial services on Alpenrose's behalf in Massachusetts.
The fourth Gestalt factor (the interest of the judicial system in the effective administration of justice) and the fifth Gestalt factor (the interests of the affected sovereigns in promoting substantive social policies) are both neutral. The former is self-evidently a wash.
With respect to the fifth factor, Alpenrose concedes that Massachusetts has a legitimate stake in providing its citizens with a convenient forum for adjudicating disputes. It contends, however, that Washington also has an interest because (on Alpenrose's theory of the case) a Washington statute will determine the compensation owed to it in connection with the expiration of the Agreement. That is true as far as it goes, but it does not take Alpenrose very far. A federal court sitting in Massachusetts is fully capable of applying Washington law.
That ends this aspect of the matter. Taken in their entirety, the Gestalt factors are in rough equipoise. Certainly, they do not show that the exercise of jurisdiction over Alpenrose in Massachusetts would be so unfair or unreasonable as to raise constitutional concerns.
We need go no further. For the reasons elucidated above, we conclude that Baskin-Robbins' attempted exercise of jurisdiction over Alpenrose in Massachusetts is consistent with due process: the assertion of jurisdiction satisfies both the relatedness and purposeful availment criteria, and the Gestalt factors do not counsel otherwise. Consequently, we reverse the district court's order of dismissal and remand the case for further proceedings consistent with this opinion.