Brazilian food company BRF S.A. is not subject to personal jurisdiction in a Maryland district court, according to a unanimous precedential opinion from the U.S. Court of Appeals for the Fourth Circuit.
The Fourth Circuit’s published opinion, released February 19, affirmed an opinion by the U.S. District Court for the District of Maryland. Maryland-based Perdue Foods LLC had argued that the district court had personal jurisdiction over BRF for an alleged breach of a trademark coexistence agreement.
Both the district and appellate courts disagreed with Perdue, holding that the coexistence agreement, rather than binding the companies to each other and creating ties between BRF and Maryland, instead was an agreement that BRF would not do business in the U.S. A Maryland choice-of-law clause in the agreement was not sufficient grounds to exercise personal jurisdiction over BRF, the Fourth Circuit said.
Perdue argued that a new “Continuing Obligations Test” should determine personal jurisdiction. Under Perdue’s proposed test, a party to any contract that imposed ongoing duties, including a duty to do nothing, would be subject to personal jurisdiction in the home district of any other party to the agreement.
The Fourth Circuit held that “ongoing duties not to do business in Maryland do not demonstrate that BRF purposefully availed itself of the privilege of doing business in Maryland.” The Fourth Circuit also explicitly rejected Perdue’s proposed test, holding that binding U.S. Supreme Court precedent dictates that “continuing obligations” between the parties are but one factor among many to be evaluated and that, to weigh in favor of jurisdiction, “continuing obligations” must “strengthen a defendant’s contacts with the plaintiff’s forum.”
The case was litigated by Simpson Thacher Partners Jeffrey E. Ostrow (Palo Alto), who argued the case before the Fourth Circuit, and Lori E. Lesser (New York) and Palo Alto Associates Brandon C. Martin and Elizabeth H. White.