Appendix — Jadair, Inc. v. Walt Keeler Co.

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INDEX TO APPENDIX

Page

Opinion of Court of Appeals ...... 1

Memorandum and Order of

District court 9

Judgment of Court of Appeals ..... 22

SUBMITTED JANUARY 11, 1982°—Decipep May 26. 1982

Before CumMINGS, Chief Judge, SPRECHER** and Woop,

Circuit Judges.

Cummines, Chief Judge. Jadair, Inc. (“Jadair”), a Wis-

consin brought a declaratory judgment ac-

tion in state court against the Walt Keeler

Company, Inc. (“Keeler”), a Kansas Keeler

removed the suit to federal court under 28 U.S.C

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The judgment appealed from is affirmed. Costs to

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USCA 5730—Midwest Law Printing Co. Ine. Chicago—6-26-82—400

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF WISCONSIN

JADAIR, INC.,

Plaintiff,

vs. Case No. 79-C-971

THE WALT KEELER

COMPANY, INC., Entered February

23, 1981

Defendant.

MEMORANDUM AND ORDER

The plaintiff in this action is

Jadair, Inc., a Wisconsin corporation

which manufactures Redi-Wash equipment

at its plant in Port Washington,

Wisconsin. A Redi-Wash machine is a

device used to clean out cement trucks

after they have hauled a load of

cement. The defendant, The Walt

10

Keeler Co., is a Kansas corporation

which purchased a Redi-Wash machine

from plaintiff. The plaintiff brought

this action seeking a declaratory

judgment that it is not indebted to

the defendant for any damage due to

difficulties defendant experienced

with plaintiff's machine. The defen-

dant has filed a motion to dismiss for

lack of personal jurisdiction. After

substantial discovery on the issue,

the plaintiff responded and the issue

is now ripe for resolution.

The following facts are undisputed.

On October 25, 1978, plaintiff's sales

manager, William Sarring, met with

defendant's president, Earl Callison,

at defendant's facility in Wichita,

Kansas to discuss the selling of a

Redi-Wash machine to defendant.

11

During this meeting, Mr. Sarring

informed Mr. Callison that if Walt

Keeler purchased a Redi-Wash machine,

it would be produced at the Jadair

facility in Port Washington, Wisconsin

and that was the only place where the

machine could be built.

On November 1, 1978, the parties

entered into a contract for the pur-

chase and sale of a Redi-Wash machine.

The contract was signed at defendant's

facilities in Wichita, Kansas. It

provided for the purchase of one

Redi-Wash machine F. O. B. seller's

plant, Port Washington, Wisconsin.

Defendant's officers and employees

never came to Wisconsin in connection

with this purchase. Furthermore,

defendant has no offices, bank accounts

or listing in Wisconsin and transacts

12

no business in the state.

Wisconsin Statutes section

801.05(5)(d) provides that the courts of

the state have jurisdiction over a person

in any action which:

(ad) Relates to goods, documents

of titls, or other things of

value shipped from this state

by the plaintiff to the defendant

on his order or direction.

This provision of the Wisconsin long-arm

statute is, however, subject to the

caveat that the legislature intended that

the statute would "reach only so far as

permitted by the due process clause of

the Fourteenth Amendment to the United

States Constitution and no further.”

Lakeside Bridge & Steel v. Mountain

State Construction Co., 597 F.2d 596, 599

(7th Cir. 1979) citing Flambeau

Plastics Corp. v. Kin Mfg.

Co., 24 Ms. 2d 459, 129 N.W.2d 237

13

(1964). Therefore, in interpreting

the statute, the Court must determine

whether the defendant has "purposefully

availfed] itself of the privilege of

conducting activities within the forum

state, thus invoking the benefits and

protections of its laws.” Hanson x.

Denckla, 357 U.S. 235, 253, 78 S.Ct.

1228, 1240, 2 L.Ed.2d 1283 (1958).

This standard must be applied on a

case-by-case basis. Id.

Recently, the seventh circuit has

demonstrated how enigmatic the concept

of personal jurisdiction is given the

various factors the courts must con-

sider. In Lakeside Bridge Steel v.

Mountain State Construction, the court

held that a foreign corporation was

not subject to jurisdiction in Wisconsin

when the sole basis for the assertion

14

of jurisdiction was the unilateral

activity of the resident plaintiff. 597

F.2d at 603. In reaching its decision,

the court applied the factors set out in

The Restatement (Second) of Conflict of

Laws, § 37 comment a. Comment a states

that when an out-of-state

may not have been done with

intention of causing effects

i ® state but could reasonably

hi: een expected to do so

It state's power to exercise

jud al jurisdiction] depends

upon a variety of factors,

including the extent of the

relationship of the state to

the defendant and to the plain-

tiff-the nature and quality of

the effects resulting from the

act, and the degree of inconven-

ience which would result to the

defendant from being forced to

stand suit in the state on the

particular cause of action.

15

Because the defendant in Lakeside had

no other contacts with Wisconsin and

because the activity it caused in

Wisconsin - the productivr. of goods

was not highly dangerous, the court

held that it lacked significant contact

with Wisconsin to subject it to juris-

diction in the state. The court,

however, expressly declined to decide

if the result would be different had

the contract specifically required

production in Wisconsin or if the

nature of the plaintiff's contractual

obligations made performance in the

forum state necessary. Id. at 603

n.13. The seventh circuit in ruling

as it did in Lakeside Bridge & Steel

aligned itself with a number of other

circuits that have held that perfor-

mance of a contract in the forum state

16

by plaintiff is not enous by itself

to establish jurisdiction over a

non-resident defendant without any

other contacts with the forum state.

Id. at 601 and cases cited therein.

Many read the seventh circuit's

decision in Lakeside as a retrenchment

by the court on the issue of personal

jurisdiction. Yet, a few months after

Lakeside, the court distinguished its

Lakeside opinion in holding that

personal jurisdiction did exist over a

non-resident defendant whose officers

had made two trips to Wisconsin for

purposes related to the contracts.

Wisconsin Electric Manufacturing Co. v.

Pennant Products, 619 F.2d 676 (7th

Cir. 1980). The court found that the

two visits to Wisconsin by officials

of Pen. nt Products were significant

17

to the formation and performance of

the contract and thus defendant had

conducted avtivities [sic] in the

forum state sufficient to satisfy due

process. Id. at 678. Absent these

two contacts, the defendant lacked any

connection with the state.

The decisiou in Pennant Products

appeared to cast doubt on the reasoning

of the Lakeside court because the

seventh circuit failed to explain why

face-to-face negotiations in Wisconsin

differed from negotiations by mail or

phone with regard to the issue of

jurisdiction. This is especially true

given the court's expressed disavowal

that it was deciding the issue based

on the defendant's presence in the

state. 619 F.2d at 678 n.8.

18

The seventh circuit further

muddled the issue in its most recent

opinion in Koster v. Automark Indus-

tries, Inc., No. 80-1765 slip op.

(7th Cir. Feb. 3, 1981). There the

court cited with approval and expressly

relied on its opinion in Lakeside to

hold that a corporation which had done

business with a citizen of the Nether-

lands, but not in the Netherlands, was

not amenable to jurisdiction in the

Netheriands. In further explaining

the Lakeside opinion, the court noted

that it assumed thac the defendant in

Lakeside believed the contract would

be performed in Wisconsin. Slip Op.

at 4. This, however, wan not enough

for a successful assertion of jurisdic-

tion under the circumstances.

19

In light of the Koster case, the

Court finds that the reasoning in

Lakeside has continuing viability.

Furthermore, the Court finds that

under the reasoning of Lakeside,

defendant does not have sufficient

contacts with the state of Wisconsin

to subject it to the jurisdiction of

the state without violating due process.

As stated earlier, defendant had no

other contacts with Wisconsin, its

officials never came into the state,

and the contract did not require that

the plaintiff perform a particularly

dangerous activity in the state.

Furthermore, contrary to plaintiff's

suggestion, that the defendant knew

the contract would be performed in

Wisconsin is not a significant factor.

Koster v. Automark Industries, Inc.,

20

Slip Op. at 4. The contract itself

did not require performance in Wiscon-

sin, nor did the nature of plaintiff's

performance make performance in the

state a necessity. That the only

plant that could produce the product

was located in Wisconsin did not make

performance necessary in Wisconsin.

It did, however, make it inevitable.

Finally, the Court concurs with

the practical reasoning of the first

circuit in Whittaker Corporation v.

United Aircraft Corporation, 482 F.2d

1079, 1085 (lst Cir. 1973) that the

"interest of the forum [state] in not

discouraging foreign purchasers from

dealing with resident sellers for fear

ef having to engage in litigation in

distant courts undercuts an expanrive

1

21

interpretation" of Wisconsin's long-arm

statute.

On the basis of the foregoing,

the Court finds that the defendant's

motion to dismiss for lack of personal

jurisdiction must be and is hereby

granted.

SO ORDERED this 23rd day of

February, 1981, at Milwaukee, Wisconsin.

/s/ Rogert W. Warren

UNITED STATES DISTRICT JUDGE

—

22

Opinion by Judge Cummings

JUDGMENT -- WITHOUT ORAL ARGUMENT

UNITED STATES COURT OF APPEALS

For the Seventh Circuit

Chicago, Illinois 60604

May 26, 1982

Before

Hon. WALTER J. CUMMINGS, Chief Judge

Hon. ROBERT A. SPRECHER, Circuit Judge*

Hon. HARLINGTON WOOD, JR., Circuit Judge

JADAIR, INC., Appeal from the

United States

Plaintiff- District Court for

Appellant the Eastern District

of Wisconsin

No. 81-1380 vs.

THE WALT KEELER No. 79-C-791

COMPANY, INC., Judge Robert .

Defendant- Warren

Appellee.

* Circuit Judge Robert A. Sprecher

read the briefs, participated in the

conference and voted to affirm.

However, he died without reviewing

this opinion.

23

This cause came before the Court

for decision on the record from the

United States District Court for the

Eastern District of Wisconsin.

On consideration whereof, IT IS

ORDERED AND ADJUDGED by this Court

that the judgment of the said District

Court in this cause appealed from be,

and the same is hereby, AFFIRMED,

costs on appeal to appellee, in accor-

dance with the opinion of this Court

filed this date.