Lakeside Bridge & Steel Co. v. Mountain State Construction Co., Inc.
597 F.2d 596 (1979)
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Rule of Law:
For a state to assert personal jurisdiction over a non-resident defendant consistent with the Due Process Clause, the defendant must purposefully avail itself of the privilege of conducting activities within the forum state; the unilateral activity of a plaintiff who has a relationship with the defendant is not, by itself, sufficient to establish minimum contacts.
Facts:
- Lakeside Bridge & Steel Company (Lakeside) is a Wisconsin corporation, while Mountain State Construction Company (Mountain State) is a West Virginia corporation with no offices, agents, or property in Wisconsin.
- Lakeside's agents visited Mountain State's offices in West Virginia to solicit a subcontract to supply structural assemblies for a dam project in Virginia.
- After being awarded the primary contract for the dam, Mountain State accepted Lakeside's proposal by mailing a purchase order from West Virginia to Lakeside in Wisconsin.
- The parties communicated via interstate mail and telephone calls, some of which were initiated by Mountain State in West Virginia.
- The contract specified delivery as "F.O.B. SELLERS PLANT MILWAUKEE, WISCONSIN with freight allowed to rail siding nearest project site."
- Lakeside unilaterally chose to manufacture the goods at its plant in Wisconsin and then shipped them to the project site in Virginia.
- Upon receipt in Virginia, Mountain State alleged the goods were defective and withheld a portion of the payment.
- Mountain State's only contacts with Wisconsin were those related to this single transaction.
Procedural Posture:
- Lakeside Bridge & Steel Company filed suit against Mountain State Construction Company in a Wisconsin state court.
- Mountain State removed the case to the United States District Court for the Eastern District of Wisconsin.
- Mountain State filed a motion to dismiss for lack of personal jurisdiction, which the District Court denied.
- The District Court subsequently entered summary judgment in favor of Lakeside.
- Mountain State, as appellant, appealed the judgment to the United States Court of Appeals for the Seventh Circuit.
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Issue:
Does the Due Process Clause of the Fourteenth Amendment permit a state court to exercise personal jurisdiction over a nonresident corporation whose only contacts with the state were ordering goods from a resident corporation, with knowledge they would likely be manufactured in and shipped from that state, and communicating via interstate mail and telephone?
Opinions:
Majority - Tone, Circuit Judge
No. The Due Process Clause does not permit Wisconsin to assert personal jurisdiction over Mountain State because the defendant did not purposefully avail itself of the privilege of conducting activities within the forum state. The court reasoned that the constitutional standard for personal jurisdiction requires minimum contacts between the defendant and the forum state, as established in International Shoe v. Washington and clarified in Hanson v. Denckla. The Hanson court held that the 'unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.' In this case, Mountain State's contacts with Wisconsin—ordering goods and communicating by mail and phone—were insufficient. The crucial fact was that Lakeside's performance of the contract in Wisconsin was its own unilateral decision; the contract did not require performance there. Mountain State's mere knowledge that the goods were likely to be manufactured in Wisconsin does not amount to 'purposefully availing' itself of the benefits and protections of Wisconsin's laws. Therefore, allowing Wisconsin to exercise jurisdiction would offend 'traditional notions of fair play and substantial justice.'
Analysis:
This case significantly reinforces the 'purposeful availment' requirement for specific personal jurisdiction in commercial contract litigation. It clarifies that a defendant merely entering into a contract with a plaintiff in the forum state is insufficient to establish minimum contacts. The decision establishes a strong precedent that courts must focus on the defendant's intentional, targeted activities directed at the forum, not the plaintiff's unilateral choices about where to perform the contract. This holding protects out-of-state purchasers from being haled into court in a seller's state simply for placing an order, thereby promoting predictability in interstate commerce.
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