Opposition Brief — Washington Restaurant Management, Inc. v. Vons Cos., Inc.

Supreme Court brief1997

Ask Donna

What actually matters in this document.

Text

ns Supreme Conve, U.S. "7

\9.) FILED

a JUN 20 1997

‘

{

CLERK

No. 96-1762 — idisilineaneadil

In the Supreme Court of the United States

OCTOBER TERM, 1996

WASHINGTON RESTAURANT MANAGEMENT, INC.,

Petitioner,

THE VONS COMPANIES, INC.,

Respondent.

On Petition for Writ of Certiorari to the

Supreme Court of California

BRIEF IN OPPOSITION

KRISTIN ANDREA LINSLEY

Counsel of Record

GREGORY P. STONE

KRISTIN S. ESCALANTE

MUNGER, TOLLES & OLSON LLP

355 South Grand Avenue

Los Angeles, CA 90071-1560

(213) 683-9100

Counsel for Respondent

Bowne of Los Angeles, Inc., Law Printers (213) 627-2200

RULE 29.1 LISTING

Respondent The Vons Companies, Inc. is a wholly-owned

subsidiary of Safeway Southern California, Inc., which in

turn is a wholly-owned subsidiary of Safeway Inc. The

shares of Safeway Inc. are publicly traded. Vons has no

subsidiaries that are not wholly-owned.

TABLE OF CONTENTS

Page

STATEMENT OF SHEE CARE . 0.5. cccnccccvess l

REASONS FOR DENYING THE WRIT ........ 10

A. The Decision Below Rests Upon A Straightforward

Application Of This Court’s Decision In Burger

King Corp. v. Rudzewicz And Does Not Merit This

Cents TRIO. isin 55k 5 ae erates 13

B. Petitioner Overstates The Claimed Conflict Among

The Lower Courts As To The Standard for Deter-

mining Whether A Claim “Arises Out Of Or Re-

lates To” A Defendant’s Contacts With The Forum 17

1. Since The Decision In Shute, The Lower Courts

Have Moved Away From Tort-Based Tests For

Personal Jurisdiction, Alleviating The Circuit

Split Created By Earlier Decisions........... 18

2. The Legal Question That Petitioner Poses Is Not

Fl SU Ge TD hn ook nciks ci esenvenes 23

A aso ts banca tenky cede senenaanud 25

iii

TABLE OF AUTHORITIES

Cases

Pages

Agency Rent A Car System, Inc. v. Grand Rent A Car

Ce, Se cee Be Ae CEE, TSG) on es coc eves 20

Akro Corp. v. Luker, 45 F.3d 1541 (Fed. Cir. 1995)6, 7, 17

Asahi Metal Industry Co. v. Superior Court, 480 U.S.

SEE C4 GAGES 60 W EME Wed as Ue bs os ens 6, 16

Ballard v. Savage, 65 F.3d 1495 (9th Cir. 1995) ... 22

Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757

NGL ca ss oa aaah aka es en ap xe dneee os 20

Bell Paper Box, Inc. v. U.S. Kids, Inc., 22 F.3d 816

i at ae cau cca ad Wade 4 sd 60 21

Burger King Corp. v. Rudzewicz, 471 U.S. 462

OE CERES EE STARE aa ee Passim

Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585

A ae eke tad sodas 6 skews eweasy ees 18

City of Virginia Beach v. Roanoke River Basin Ass'n,

776 F.2d 484 (4th Cir. 1985) ................. 22

Doe v. American Nat'l Red Cross, 1197 U.S. App.

eee Qo By oe . ) er 22

Francosteel Corp. v. M/V Charm, 19 F.3d 624 (11th

a oy sss Vas kb S ab aelea sk 50's 6,7

Gelfand v. Tanner Motor Tours, Ltd, 339 F.2d 317

ls yas ca ve kiwis 64d wae Ga ie bn 13, 20

Helicopteros Nacionales de Colombia v. Hall, 466

U.S. 408, 414 (1984) .............. 6, 7, 16, 17, 18, 20

In re Oil Spill by Amoco Cadiz, 699 F.2d 909

(Tth Cir. 1983) ....cccesvccccccssccscccees 6, 17, 21

International Shoe Co. v. Washington, 326 U.S. 310 (1945)

Pe rdaa eens eb ONSEN eed ewe R 8, 9, 10, 12, 17, 18, 22

TABLE OF AUTHORITIES

CASES

Pages

Keeton v. Hustler Magazine, Inc., 465 U.S. 770

CESDOD cin cuts sue kde tic thaerted dduxtuaedenss 6, 16

Marino v. Hyatt Corp., 783 F.2d 427 (ist Cir. 1986) 20

Northrup King Co. v. Compania Productora

Bemillas, 51 F.3d 1383 (8th Cir. 1995) ........ 6

Nowak v. Tak How Investments, Ltd., 94 F.3d 708

( bet Cr. Pe 6 se bole ee wees wuiwabeuareeiiees 13, 19

Pearrow v. National Life & Acc. Ins. Co., 703 F.2d

LOGT COR GC See ea ais Ras hbase ee 20, 21

Pizarro v. Hoteles Concorde Int'l Barbadas, Ltd., 976

Pa THE Cae Gas ROD CR hee L OO hE Se ee 20

Prejean v. Sonatrach, Inc., 652 F.2d 1260

bat a RE Oe 9

Shaffer v. Heitner, 433 U.S. 186 (1977) .......... 6, 16

Shute v. Carnival Cruise Lines, Inc., 897 F.2d

377 (9th Cir. 1990), reversed on other grounds,

OOF Gia He AEE ab adie W ed vie es aes on 9, 13, 18

Southwire Co. v. TransWorld Metals & Co., 735 F.2d

£11: . BS . Se eee rere 22

Third National Bank v. WEDGE Group, Inc.,

S62 F.2d 1087 (6th Cir. 1969) ... 0. nv cciticececs 6, 21

Vermeulen v. Renault, U.S.A. Inc., 985 F.2d 1534

CORE FUE oi 6 660-00 he ees 246s RU 7

Vons Companies, Inc. v. Seabest Foods, Inc., 37 Cal.

A TE Fae LARD och sks check clesebh Vine’ 3

Wessel, Arnold & Henderson v. National Med. Waste,

Inc., 65 F.3d 1427 (8th Cir. 1995)............. 21

No. 96-1762

In the Supreme Court of the United States

OCTOBER TERM, 1996

WASHINGTON RESTAURANT MANAGEMENT, INC.,

Petitioner,

THE VONS COMPANIES, INC.,

Respondent.

On Petition for Writ of Certiorari to the

Supreme Court of California

BRIEF IN OPPOSITION

Respondent The Vons Companies, Inc. respectfully prays

that the Court deny the petition for a writ of certiorari filed

by Washington Restaurant Management, Inc.

STATEMENT OF THE CASE

This case arises from an outbreak of illnesses among

customers of Jack In The Box restaurants in several western

states, including Washington and California. The customers

became ill after eating undercooked hamburger patties con-

taining Escherichia coli O157:H7, a pathogenic bacteria that

occurs naturally in raw beef but is killed with proper

cooking.

Foodmaker, Inc. is a California-based corporation that

manages the Jack In The Box restaurant chain through its

corporate headquarters in San Diego, California. Petitioner

Washington Restaurant Management, Inc. (“WRMI”)

owned and operated Jack In The Box outlets in the State of

Washington pursuant to a detailed franchise agreement with

Foodmaker. WRMI was among the Jack In The Box

franchisees whose restaurants were implicated in the out-

break. Respondent The Vons Companies, Inc. became in-

volved in the Jack In The Box litigation because it processed

the hamburger patties from raw meat delivered by upstream

suppliers.

The present action began in mid-1993, when cighty-five

Jack In The Box franchisees from California and elsewhere

(not including petitioner WRMI or any other franchisee

that was implicated in the outbreak) sued Foodmaker,

Vons, and several suppliers of raw beef in the California

Superior Court, seeking damages for loss of business caused

by the adverse publicity surrounding the outbreak. Food-

maker cross-complained against Vons, based upon Vons’

role in processing the hamburger patties.

Vons then filed a cross-complaint against Foodmaker and

the Jack In The Box franchisees that had been identified

with specific reported illnesses. Among the cross-defendants

were petitioner WRMI and Seabest Foods, Inc. (Seabest

was a party to the proceedings below but did not file a

petition for certiorari.) Vons alleged that the standard cook-

ing procedures required by Foodmaker’s franchise agree-

ment were inadequate to ensure that hamburger patties

would be properly cooked and thus safe for human con-

sumption. Vons also alleged that the equipment and training

procedures mandated by Foodmaker’s franchise agreement

were below industry standard, with the result that petitioner

and other Jack In The Box franchisees did not properly cook

the hamburger products and customers consequently were

placed at risk of illness. Vons claimed damages for indem-

nity, as well as lost profits resulting from negative publicity

caused by the outbreak.

The Superior Court granted WRMI’s motion to quash

service of Vons’ cross-complaint for lack of personal juris-

diction, and the California Court of Appeal affirmed. See

Vons Companies, Inc. v. Seabest Foods, Inc., 37 Cal. App.

4th 1090 (1995). The Supreme Court of California then

granted Vons’ petition for review.

The California Supreme Court reversed the judgment of

the Court of Appeal, holding that the Due Process Clause of

the Fourteenth Amendment did not prohibit California from

exercising personal jurisdiction over WRMI. The court

rested its decision primarily upon this Court’s decision in

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985),

which the court concluded “largely governs the outcome

here.” Pet. App. 14a. The court found that the Jack In The

Box franchisees here, like the franchisee in Burger King, had

“reached out beyond” their state of residence and “purpose-

fully availed themselves of benefits in the forum by reaching

out to forum residents to create an ongoing franchise rela-

tionship.” Pet. App. 14a-15a.

The California Supreme Court’s analysis turned upon a

detailed comparison between the franchise agreement at

issue here and the contract terms considered by this Court

in Burger King. As in Burger King, petitioner affiliated itself

with a business with headquarters in the forum state, know-

ing “that [its] operations would be supervised by that

headquarters.” Pet. App. 15a. The court cited this Court’s

reasoning that “‘[i]n light of [the franchisee’s] voluntary

acceptance of the long-term and exacting regulation of his

business from Burger King’s Miami headquarters, the

“quality and nature” of his relationship to the company in

Florida can in no sense be viewed as “random,” “fortui-

tous,” or “attenuated.” ’” Jd. at 1Sa-l16a (quoting Burger

King, 471 U.S. at 480).'

The California Supreme Court found that WRMI and

Seabest, “like the defendants in Burger King,” had “pur-

posefully availed themselves of benefits in the forum by

reaching out to forum residents to create an ongoing

franchise relationship.” Pet. App. 14a. “As in Burger King,

the franchisees here reached out to the California Food-

maker business, and clearly sought out and benefited from

the California business’s multi-state name-recognition and

organization,” including “the standardization provided for

under the franchise agreement.” Jd. at 16a, 27a-28a. The

court noted that Seabest and WRMI “purposefully under-

took ongoing contractual obligations to the California busi-

ness,” and made “substantial and continuing purchases from

Foodmaker in California.” Jd. at 16a. Among other things,

WRMI and Seabest were required by the franchise agree-

ment to use only equipment approved by Foodmaker, to

adopt the uniform food preparation standards designed by

Foodmaker, to purchase its hamburger meat through Food-

raaker, and to allow Foodmaker to inspect its restaurants on

@ regular basis to ensure compliance. Jd. at 4a-6a, 25a. As

noted below, Vons’ claims arose directly from these provi-

sions of the franchise agreement.

The California Supreme Court concluded, based on Bur-

ger King, that if Foodmaker had sued Seabest and WRMI in

California in a breach of contract action based on the

franchise agreements, California clearly would have had

'In its petition, WRMI suggests that the California Supreme Court's

finding of jurisdiction was based upon sporadic contacts with California.

Pet. 4. That is not the case, as is evident from the court’s extensive

discussion of the franchise relationship between Foodmaker and its

franchisees, pursuant to which the franchisees, including WRMI, sub-

mitted to detailed and extensive regulation from the State of California

of their franchise operation.

jurisdiction over the action (Pet. App. 16a) — a proposition

that WRMI does not dispute here and did not dispute

below. Likewise, the court noted that if Foodmaker were to

seek indemnity from the franchisees based upon a violation

of the franchise agreement, jurisdiction would be readily

established. Jd. at 16a-17a. Thus, the only remaining ques-

tion was whether it made a difference that a “third party”

such as Vons, rather than Foodmaker, was the plaintiff

bringing the suit against the franchisees. Jd. at 17a.

The California Supreme Court held that it did not. Pet.

App. 17a. Because it was Seabest and WRMI themselves —

and not Vons or any other third party — that purposefully

established extensive contacts with the forum state, it could

not be said that requiring them to answer Vons’ claim in that

state would be “to allow a third party unilaterally to draw

them into a connection with the state.” Jd. Likewise, be-

cause Seabest and WRMI “had an ongoing commercial

relationship” with California, the exercise of jurisdiction

over them would not “depend on ‘random, fortuitous or

attenuated’ contacts.” Id.

The court further explained that, under precedent of this

Court and the lower courts, “the defendant’s forum activi-

ties need not be directed at the plaintiff in order to give rise

to specific jurisdiction.” Jd. at 26a (emphasis in original).

Rather, this Court’s decisions all have emphasized the

relationship among “the defendant, the forum, and the

litigation — not between the plaintiff and the defendant.”

Id. at 27a (emphasis in original). In each of this Court’s

cases in this area, the court noted, “the relevant contacts are

said to be with the forum, because it is the defendant’s

choice to take advantage of opportunities that exist in the

forum that subjects it to jurisdiction.” Jd. (emphasis in

original; citing Asahi Metal Industry Co. v. Superior Court,

480 U.S. 102, 112 (1987) (plurality opinion); Burger King,

471 U.S. at 475, 479; Helicopteros Nacionales de Colombia

v. Hall, 466 U.S. 408, 414 (1984); and Shaffer v. Heitner,

433 U.S. 186, 204 (1977) ). The court relied upon Keeton v.

Hustler Magazine, Inc., 465 U.S. 770 (1984), where this

Court held that a publisher could be held accountable in

New Hampshire for defamatory publications there, even

though the plaintiff had no relationship with New Hamp-

shire. The court also cited decisions of the Seventh Circuit

and the Federal Circuit holding that it is the defendant’s

relationship with the forum, and not with the particular

plaintiff bringing the action, that drives the personal juris-

diction analysis. Pet. App. 26a-27a (citing Akro Corp. v.

Luker, 45 F.3d 1541 (Fed. Cir. 1995) and Jn re Oil Spill by

Amoco Cadiz, 699 F.2d 909 (7th Cir. 1983)).

The court also rejected petitioner’s argument that there

was not a sufficient connection between Vons’ claims and

petitioner’s contacts with California. The court looked to its

earlier precedent holding that there must be a “substantial

connection” between the action and the defendant’s forum-

based contacts, and also looked to this Court’s stated re-

quirement that the action be “ ‘related to or “arise[ ] out

of” a defendant’s contacts with the forum.’” Pet. App. 20a

(citing Helicopteros, 466 U.S. at 414 and Burger King, 471

U.S. at 472). The court also noted that its formulation of

the test was consistent with the decisions of the Sixth

Circuit in Third National Bank v. WEDGE Group, Inc., 882

F.2d 1087, 1091 (6th Cir. 1989); the Seventh Circuit in

Amoco Cadiz, 699 F.2d at 917; the Eighth Circuit in

Northrup King Co. v. Compania Productora Semillas, 51

F.3d 1383, 1388 (8th Cir. 1995); the Eleventh Circuit in

Francosteel Corp. v. M/V Charm, 19 F.3d 624, 627 (11th

Cir. 1994) and Vermeulen v. Renault, U.S.A. Inc., 985 F.2d

1534, 1546 (11th Cir. 1992); and the Federal Circuit in

Akro Corp. v. Luker, 45 F.3d at 1547. The court concluded

that, under the standard established by these cases, “Vons

has demonstrated a substantial nexus between WRMI’s and

Seabest’s business contacts in California and Vons’ tort

claims against WRMI and Seabest.” Pet. App. at 24a.

The California Supreme Court explained that the terms

of the franchise contract between WRMI and Foodmaker

were at the heart of Vons’ claims against WRMI, thereby

creating a “substantial connection” between WRMI’s con-

tacts with the forum and Vons’ claims. Pet. App. 18a-20a.

The court noted that petitioner’s contacts with the forum

“bore a substantial relationship to the claimed injury to

Vons’s business and reputation” because Foodmaker’s

franchise agreement required petitioner to purchase the

hamburger patties from Foodmaker and to prepare them

“according to the standards provided under the franchise

agreement.” Jd. at 28a.” “Vons’ cross-complaint alleged that

the franchisees failed to cook the meat properly because of

deficiencies in the cooking and training procedures and

equipment requirements provided for by Foodmaker on a

systemwide basis.” Jd. The court concluded that Vons’

claims were substantially related to petitioner's contacts

with California, including its voluntary submission to an

ongoing and extensive contractual relationship with

Foodmaker:

The franchise relationship, with its uniform stan-

dards for cooking food, training employees, and

buying equipment, itself was a source of injury to

Vons. ... Accordingly, both the negligence claims

and the claim for indemnification arose out of the

contractual relationship between Foodmaker,

WRMI and Seabest, a relationship that had a

substantial connection to California. Pet.

App. 24a-25a.

? Petitioner erroneously states that it purchased the hamburger meat

from “distributors and suppliers in the State of Washington.” Pet. 4. In

fact, as the California Supreme Court correctly noted, petitioner pur-

chased the hamburger patties from Foodmaker.

The court also found significant the terms of Foodmaker’s

franchise agreement stating that in any dispute regarding the

franchise agreement, the parties would be bound both by

California law and by provisions establishing California

courts as the venue for any such dispute. Pet. App. 16a.

Given these provisions, the court observed, “it was not only

predictable that [the franchisees] might face litigation in

California — it was settled that any litigation on the contract

would occur in this forum.” Jd.

In determining the standard that should apply to assess

the relationship between the defendant’s contacts with the

forum and the plaintiffs cause of action, the California

Supreme Court rejected two prior decisions of the California

appellate court, which had applied a “proximate cause” test

that formed the basis for the California Court of Appeal’s

decision below. Pet. App. at 3la-33a. The California Su-

preme Court held that the “proximate cause” analysis used

in these cases was inconsistent with this Court’s formulation

in Burger King and Helicopteros, which “states in the

disjunctive that jurisdiction is proper when litigation results

from alleged injuries that ‘arise out of or relate to’ forum

activities.” Jd. at 33a (citing Burger King, 471 U.S. at 472;

Helicopteros, 466 U.S. at 414, n.9; and International Shoe

Co. v. Washington, 326 U.S. 310, 319 (1945)). The court

also reasoned that a “proximate cause” test would inappro-

priately prohibit jurisdiction in most contract actions arising

out of ongoing interstate relations — because in most such

cases, as in Burger King itself, it cannot be said that the

contractual relationship with the forum caused a party to fail

to honor the terms of the contract. Pet. App. 34a. Accord-

ingly, the court rejected the suggestion of the lower Califor-

nia courts that a “proximate cause” test should govern the

personal jurisdiction analysis. Jd. at 34a-36a. The court did

not point to any federal circuit that had applied a “proxi-

mate cause” test.

The California Supreme Court did note that two federal

circuits have articulated a broad “but for’ test for determin-

ing whether an exercise of specific jurisdiction is sufficiently

related to a defendant’s forum-based contacts. Specifically,

the court cited the Ninth Circuit’s decision in Shute v.

Carnival Cruise Lines, 897 F.2d 377 (9th Cir. 1990),

reversed on other grounds, 499 U.S. 585 (1991), as well as a

footnote in the Fifth Circuit’s opinion in Prejean v. Sona-

trach, Inc., 652 F.2d 1260, 1270 n.21 (Sth Cir. 1981) —

both of which set forth a broad “but for” test for determin-

ing whether a claim is sufficiently related to a defendant’s

contacts with the forum. Pet. App. 38a-39a. The California

Supreme Court rejected the “but for” test advanced in these

cases, concluding that the importation of tort-based causa-

tion standards that focus on physical factors — such as the

“but for” test— are not useful in analyzing “the social

activities that are part of the causal chain in typical personal

jurisdiction disputes.” Pet. App. 40a. The court reasoned

that “contacts in personal jurisdiction cases are generally

social acts, like advertising directed at forum residents.” Jd.

at 41a. The court concluded that analyzing these issues

under a relational test, rather than a causal test, is more

consistent both with the concerns underlying personal juris-

diction questions, and with this Court’s precedents speaking

“of a relationship between the cause of action and the

contacts in the forum,” and using “relatively broad terms to

describe the necessary relationship.” Jd. (citing Jnterna-

tional Shoe, 326 U.S. at 319; Burger King, 471 U.S. at 472;

and Helicopteros, 466 U.S. at 414, n.9).

Finally, the court rejected Seabest’s invitation to adopt a

“substantive relevance” test, which would look to whether

acts forming each essential element of the plaintiff's sub-

stantive cause of action occurred in the forum. Pet. App.

43a-52a. The court found that this test — which has been

advanced by one legal commentator in the area but not

adopted by any court? — focused unduly on the particular-

ized elements of each cause of action under state law, and

was inconsistent with this Court’s cases establishing a rela-

tional test and making clear that jurisdiction need not be

based solely upon a defendant's activities within, the physical

boundaries of the forum state. Jd. at 49a-50a.

REASONS FOR DENYING THE WRIT

Nothing in the California Supreme Court’s carefully

reasoned decision warrants review by this Court. As that

court recognized, this Court’s decision in Burger King

largely controls the personal jurisdiction analysis in this

case. To the limited extent that Burger King is not directly

controlling — i.e., to the extent that the claims against

WRMI are asserted by Vons, rather than by the franchisor

itself — the California Supreme Court correctly held that

the proper focus is on the relationship between the defen-

dant and the forum, not on the relationship between the

defendant and the plaintiff. Because there is no split on this

issue and the point was correctly decided, it is not worthy of

this Court’s review.

The only other issue identified by petitioner is the proper

standard to be applied in determining whether an action

“arises out of or relates to” a defendant’s forum-based

contacts so as to warrant application of the Jnternational

Shoe “minimum contacts” analysis — rather than the gen-

eral jurisdiction standard that must be met when an action

does not relate to the defendant’s forum contacts. See

generally Helicopteros, 466 U.S. at 414-15. For three rea-

> The court soundly rejected Seabest’s argument that this test “now

represents the majority view in the federal circuits.” Pet. App. 44a.

sons, this issue does not warrant granting the petition in this

case.

First, petitioner dramatically overstates the degree to

which confusion continues to exist in the lower courts on

this issue. Despite petitioner’s contention that there is a split

between courts applying a “proximate cause” test and those

applying a different standard, there is no federal circuit that

continues to apply the “proximate cause” standard. Of the

three circuits to which petitioner attributes this test, one of

those courts — the First Circuit — has explicitly abandoned

any strict “proximate cause” test, and the two other cases

that petitioner cites — decisions of the Second and Eighth

Circuits — have been construed as merely interpreting the

state long-arm statutes rather than establishing a constitu-

tional standard. More recent decisions of the Second and

Eighth Circuits apply a relational standard much like that

applied by the California Supreme Court here.

Second, the issue is not squarely presented in this case

because, under any of the standards discussed by the Cali-

fornia Supreme Court, the result would be the same. As the

court explained, the extensive and detailed provisions of the

franchise agreement between Foodmaker and petitioner are

more than sufficient to establish the requisite contacts with

the State of California. It is these contacts that form the

basis for Vons’ claims, which are based upon the allegation

that the procedures, equipment, and training mandated by

Foodmaker’s standard franchise agreement were insufficient

to ensure proper cooking of the hamburger patties involved

in the outbreak. In short, Vons’ claims flow directly from the

franchise agreement itself — and thus would satisfy both

this Court’s “arises out of or relates to” test as generally

stated (see Burger King, 471 U.S. at 472), and any of the

variations on that test that have been applied by the lower

courts.

Third, petitioner’s more general request for “clarification’”’

of this Court’s standards for personal jurisdiction is nothing

more than an invitation to engage in a fact-bound inquiry

into whether petitioner’s extensive contacts with California

through its franchise agreements with Foodmaker are suffi-

ciently related to Vons’ claims to warrant the exercise of

personal jurisdiction — as is evident from fact-specific na-

ture of the “Question Presented for Review” in the petition.

This Court has frequently and clearly stated the relatedness

requirement in its previous cases. See, e.g., International

Shoe, 326 U.S. at 319-20 (minimum contacts analysis is

appropriate where the claims “arose out of or are connected

with” the defendant’s contacts with the forum state);

Helicopteros, 466 U.S. at 414 and n.9. Most recently, in

Burger King, the Court again discussed the “relatedness”

requirement, restating the standard as whether the plaintiff's

claims “arise from or relate to” the defendant’s forum

contacts. As long as the defendant’s forum activities satisfy

this broad standard and constitute “minimum contacts”

with the forum, the Court is assured that the fairness and

predictability concerns of the Due Process Clause have been

met. Moreover, because this Court’s test is inevitably fact-

specific, it is unlikely that any one case will definitively settle

the law in this area. See Burger King, 471 U.S. at 485-86

(noting that “the facts of each case must be weighed in

determining whether personal jurisdiction would comport

with fair play and substantial justice”).

In sum, whatever confusion may have existed among the

lower courts as to when an action “arises out of or relates to”

a defendant’s forum-based contacts largely has been allevi-

ated by recent cases, including the decision below, rejecting

tort-based analogies and focusing instead on the relationship

between the defendant and the forum. Given the growing

consensus on this issue, this Court should await further

developments in the lower courts. At the very least, the

Court should await a case in which resolution of the issue

will determine the outcome, such as cases in which a

fortuitous contact with the forum is a “but for” cause of an

injury in a distant state but might not meet more stringent

relational standards for specific jurisdiction. See, e.g., Shute,

897 F.2d 377 (jurisdiction upheld where plaintiff's purchase

of travel tickets in the state of Washington were held to be

the “but for” cause of a slip-and-fall injury in international

waters on a cruise ship that departed from Florida).

A. The Decision Below Rests Upon A Straightforward

Application Of This Court’s Decision In Burger King

Corp. v. Rudzewicz And Does Not Merit This Court’s

Review

As the California Supreme Court recognized, the per-

sonal jurisdiction issue in this case was largely determined

by this Court’s analysis in Burger King. In Burger King, this

Court found that the Michigan franchisee’s extensive con-

tacts with the State of Florida through his closely regulated

contractual relationship were more than sufficient to com-

port with applicable due process standards — even though

the franchisee had never physically set foot in Florida. The

Court reasoned that “where the defendant... has created

‘continuing obligations’ between himself and residents of the

forum, he manifestly has availed himself of the privilege of

conducting business there... [B]ecause his activities are

shielded by ‘the benefits and protections’ of the forum’s

laws, it is presumptively not unreasonable to require him to

submit to the burdens of litigation in that forum as well.” Jd.

at 475-76 (citations omitted).

This Court concluded that the defendant’s franchise

agreement with Burger King constituted “a substantial

connection”’ with the State of Florida. Jd., at 479 (emphasis

in original). “Eschewing the option of operating an indepen-

dent local enterprise, [the defendant] deliberately

‘reach[ed] out beyond’ Michigan and negotiated with a

Florida corporation for the purchase of a long-term

franchise and the manifold benefits that would derive from

affiliation with a nationwide organization.” Jd. at 479-80.

“TH Je entered into a carefully structured 20-year relation-

ship that envisioned continuing and wide-reaching contacts

with Burger King in Florida.” Jd. at 480. “In light of [the

defendant’s] voluntary acceptance of the long-term and

exacting regulation of his business from Burger King’s

Miami headquarters, the ‘quality and nature’ of his relation-

ship to the company in Florida can in no sense be viewed as

‘random,’ ‘fortuitous,’ or ‘attenuated.’ ” Jd.

This case is virtually indistinguishable from Burger King.

As in Burger King, the California Supreme Court held that

petitioner had subjected itself to jurisdiction in the Califor-

nia courts when it contracted for the significant benefits

associated with an affiliation with a national fast food chain

and, in return, submitted to extensive regulation of its

activities through the franchise agreement. Pet. App. 16a-

18a, 39a-30a. The agreement that petitioner entered into

with Foodmaker was nearly identical to those in Burger

King, including the strong emphasis on uniformity of all

aspects of the operation of restaurants within the Jack In

The Box “System.” Jd. at 4a, 16a-17a, 27a-28a. Foodmaker

franchisees, including petitioner, were required to submit to

exacting regulation of every aspect of their operations,

including “uniform standards for cooking food, training

employees, and buying equipment.” Jd. at 25a-26a. Com-

pare also JA II 629% (franchise agreement requiring fran-

chisee to submit to uniform standards for “restaurant

designs and color scheme, signage, interior decor, equipment

systems, product and supplies, specifications, menu formats

and service methods and procedures”) with Burger King,

471 U.S. at 464, n.1 (mandating uniform “restaurant format

and operating system, including a recognized design, decor,

“References to “JA” are to the Joint Appendix, Volumes I and II, in

the record before the California Court of Appeal.

color scheme and style of building, uniform standards,

specifications and procedures of operation, quality and uni-

formity of products and services offered”). As in Burger

King, the parties acknowledged that these standards were

“necessary and essential to the image and success of each

Jack In The Box restaurant and the [Jack In The Box]

system [as a whole].” JA II 629 (franchise agreement).

66 6

Like the franchisee in Burger King, petitioner “ ‘reached

out beyond’”’ its state of residence and negotiated with a

California corporation “for the purchase of a long-term

franchise and the manifold benefits that would derive from

affiliation” with a multistate organization. Burger King, 471

U.S. at 479-80. It entered into a carefully structured long-

term relationship that “envisioned continuing and wide-

reaching contacts” with Foodmaker in California. Jd. at 480.

Finally, it voluntarily accepted “the long-term and exacting

regulation” of its business from Foodmaker’s San Diego

headquarters. Jd. As the California Supreme Court noted,

WRMI’s contacts with California “can in no sense be

viewed as ‘random,’ ‘fortuitous,’ or ‘attenuated.’ ” Pet. App.

at 15a-16a (quoting Burger King, 471 U.S. at 480).

Indeed, petitioner had more extensive ties with California

than the individual franchisee in Burger King, who had “no

physical ties to Florida” other than his partner’s attendance

at a brief training course. /d. at 479. Petitioner had signifi-

cant physical contacts with California, including attendance

at training sessions at Foodmaker facilities in California,

trips by its principals to California in connection with the

franchise relationship, and the negotiation and partial execu-

tion of the franchise agreements in California. Pet. App. 5a-

6a. Because the Burger King defendant’s very limited con-

tacts were enough to constitute “purposeful availment” of

the benefits and protections of the forum, it follows that

WRMI’s more extensive contacts meet that standard.

This Court in Burger King also emphasized the choice of

law provision in Burger King’s franchise agreement, which

was a significant indication that the franchisee “ ‘purpose-

fully availed himself of the benefits and protections of

Florida’s laws’ by entering into contracts expressly providing

that those laws would govern franchise disputes.” Burger

King, 471 U.S. at 482. Once again, this case is even stronger

because petitioner not only availed itself of California’s Jaws,

but also invoked the protection and jurisdiction of its courts

in any action — including an action brought by petitioner

itself — to enforce the agreements. Pet. App. 4a-Sa. As the

California Supreme Court noted, this provision clearly indi-

cates that petitioner purposefully availed itself of the bene-

fits of California law. Jd. at 16a.

The only difference between this case and Burger King is

that here the plaintiff is not a party to the franchise agree-

ment that gives rise to “minimum contacts” with the forum.

As to this issue, the California Supreme Court correctly

held that it is the relationship between the defendant and

the forum, and not the relationship between the defendant

and the plaintiff, that controls the personal jurisdiction issue.

See Pet. App. 26a (citing Asahi, 480 U.S. at 112 (plurality

opinion); Burger King, 471 U.S. at 475, 479; Helicopteros,

466 U.S. at 414; Shaffer, 433 U.S. at 204 and Keeton, 465

U.S. at 775. As the court also noted, the federal courts to

address this issue — the Seventh Circuit and the Federal

Circuit — have reached the same conclusion, holding that it

is the defendant’s relationship with the forum, and not with

the particular plaintiff bringing the action, that drives the

personal jurisdiction analysis. Pet. App. 26a-27a (citing

Akro Corp., 45 F.3d at 1547 and Amoco Cadiz, 699 F.2d at

917). Because there is no conflict on this issue and the point

was correctly decided below, it is not worthy of this Court’s

review.

B. Petitioner Overstates The Claimed Conflict Among The

Lower Courts As To the Standard For Determining

Whether A Claim “Arises Out Of Or Relates To” A

Defendant’s Contacts With The Forum

The petition focuses entirely on a claimed conflict among

the federal courts as to the appropriate standard for deter-

mining whether a cause of action “arises out of or relates to”

the defendant’s forum-based contacts. Since /nternational

Shoe, this Court has held that the Due Process Clause is not

offended by a state’s exercise of jurisdiction over an out-of-

state defendant where the defendant has availed itself of the

benefits of the forum state and the obligations that the State

seeks to enforce “arise out of or are connected with the

activities within the state.” 326 U.S. at 319. More recently,

this Court has reiterated that the “minimum contacts”

analysis of International Shoe applies where the plaintiffs’

claims “arise out of or relate to” the defendants’ contacts

with the forum. Burger King, 471 U.S. at 472-73; see also id.

at 474 (where defendant has engaged in activities with

respect to the forum, specific jurisdiction is proper “for

disputes relating to such activity”); Helicopteros, 466 U.S.

at 414 (relevant test for application of International Shoe is

whether “a controversy is related to or ‘arises out of ” the

defendant’s forum-related activities). It is this latter stan-

dard, petitioner claims, that has given rise to confusion in

the lower courts.

1. Since The Decision In Shute, The Lower Courts Have

Moved Away From Tort-Based Tests For Personal

Jurisdiction, Alleviating the Circuit Split Created By

Earlier Decisions

WRMI asserts that a serious conflict exists among the

circuit courts over the degree of relatedness required be-

tween the defendant’s contacts with the forum and the

plaintiff's claims in order for the Jnternational Shoe “mini-

mum contacts” test to apply. Petitioner asserts that the

circuits are split into “two general camps” — one advocating

a stringent “proximate cause” standard for relatedness and

the other a “broad ‘but for’ ” standard. Pet. 11.

Petitioner’s statement might have had some merit in

1990, when this Court granted certiorari in Carnival Cruise

Lines, Inc. v. Shute, 498 U.S. 807-08 (1990). That case

arose from a decision of the Ninth Circuit, in which the

Ninth Circuit had noted that the federal courts had reached

different conclusions on the issue, some applying a “but for”

test and others using a “proximate cause” standard. The

Ninth Circuit specifically noted that the choice between

these two tesis determined the outcome in that case because

the plaintiffs’ purchase of travel tickets in the forum — a

fact that the Ninth Circuit found to be a “but for” cause of

their injury on a cruise ship in international waters — would

not have been sufficient under a “proximate cause” test. The

Ninth Circuit selected the “but for” standard and upheld

jurisdiction. 9

This Court granted certiorari on this question in Shute,

see 498 U.S. 807-08 (1990), but ultimately decided the case

on another ground without reaching the personal jurisdiction

issue. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585

(1991). The Court noted that “it is not the habit of the

Court to decide questions of a constitutional nature unless

absolutely necessary to a decision of the case.” Jd. at 589-90

(citation omitted).

Although the tort-based “proximate cause” and “but for”

standards may have been a perceived source of circuit

conflict in 1990, when this Court granted certiorari in Shute,

the lower courts more recently have moved away from

analyzing the “relatedness” requirement in these terms. The

general trend among the federal circuit courts — like the

California Supreme Court’s decision below — is to look

directly to this Court’s “arise out of or relates to” test rather

than apply tort-based causation standards such as “proxi-

mate cause” or “but for.” Indeed, the “proximate cause”

standard — one side of the split that Petitioner asks this

Court to resolve — has been all but abandoned by the First

Circuit, the only federal circuit in which it continued to be

the law. See Nowak v. Tak How Investments, Lid., 94 F.3d

708, 716 (1st Cir. 1996). Petitioner concedes that Nowak

represents a retreat from the stringent “proximate cause”

standard. Pet. 11.

In Nowak, the plaintiff's decedent drowned in the pool of

the defendant’s Holiday Inn in Hong Kong. Plaintiff's em-

ployer was a Massachusetts corporation that had contracted

for a minimum number of nights at the Holiday Inn in

return for a discounted rate. The defendant kept in regular

contact with the Massachusetts corporation as to their rates,

and mailed promotional material to Massachusetts.

The First Circuit found that the necessary degree of

relatedness between contacts and cause of action had been

met, reasoning that “[w]hile the nexus between Tak How’s

solicitation of [the Massachusetts corporations] business

and Mrs. Nowak’s death does not constitute a proximate

cause relationship, it does represent a meaningful link be-

tween Tak How’s contact and the harm suffered.” Nowak,

94 F.2d at 716. The court concluded that this “meaningful

link” satisfied due process limits on the court’s exercise of

personal jurisdiction over the defendants.

The First Circuit in Nowak rejected the argument that a

line of First Circuit cases, beginning with Marino v. Hyatt

Corp., 793 F.2d 427 (1st Cir. 1986) and including Pizarro v.

Hoteles Concorde Int'l, C_A., 907 F.2d 1256 (1st Cir. 1990)

(cited by petitioner here), established “proximate cause”’ as

the applicable federal standard. The court recognized, as it

had previously, that these cases rested upon an interpreta-

tion of Massachusetts’s long-arm statute that since had been

rejected by the Massachusetts Supreme Judicial Court.

Nowak, 94 F.3d at 713 (citations omitted). The court

concluded that a strict “proximate cause” test was nol

appropriate in the constitutional context because it was

“unnecessarily restrictive.” Jd. at 715.

Petitioner attempts to resurrect the proximate cause test

by erroneously claiming that the Second and Eighth Cir-

cuits adhere to this standard. However, the two cases cited

for this proposition — Pearrow v. National Life & Acc. Ins.

Co., 703 F.2d 1067 (8th Cir. 1983), and Gelfand v. Tanner

Motor Tours, Lid., 339 F.2d 317 (2nd Cir. 1964) — do not

support the point. Both cases were decided before this

Court’s decisions in Burger King and Helicopteros, and both

have been construed as mere interpretations of the relevant

state long-arm statutes, which require a more stringent

relationship between the forum contacts and the cause of

action. See, e.g., Beacon Enterprises, Inc. v. Menzies, 715

F.2d 757, 765 (1983) (construing Gelfand as an application

of New York’s longarm statute); Pet. App. 46a (noting that

Pearrow has been construed as an interpretation of the state

long-arm statute, rather than a constitutional ruling).

Petitioner fails to cite other, more recent decisions of both

the Second and the Eighth Circuits assessing the relation-

ship between the defendant’s contacts with the forum and

the cause of action under a relational standard very similar

to the standard applied by the California Supreme Court

here. In Agency Rent A Car System, Inc. v. Grand Rent A

Car Corp, 98 F.3d 25 (2nd Cir. 1996), for example, the

Second Circuit relied upon this Court’s analysis in Burger

King to conclude that the defendants were subject to per-

sonal jurisdiction in New York:

As in Burger King, licensees have ‘deliberately

reach[ed] out’ beyond their home states for the

purpose of ‘a long-term franchise and the manifold

benefits that would derive from affiliation with a

nationwide organization.’ As such, they purpose-

fully availed themselves of the forum and

shouldhave reasonably foreseen being haled into

court here.

98 F.3d at 32 (citing Burger King, at 479-80). Significantly,

Gelfand is no longer cited by any court as authority on the

degree of “relatedness” required by the due process clause.

The Eighth Circuit also has changed its standard since its

decision in Pearrow. In Bell Paper Box, Inc. v. U.S. Kids,

Inc., 22 F.3d 816 (8th Cir. 1984), the Eighth Circuit

explicitly acknowledged adjusting its “relatedness” standard

to comport with recent decisions of this Court. It then

applied the “arising out of or related to” standard to find

that it had specific jurisdiction over the defendant. /d. at

819; see also Wessel, Arnold & Henderson v. National Med.

Waste, Inc., 65 F.3d 1427 (8th Cir. 1995). As these cases

indicate, the Eighth Circuit has moved toward a relational

standard rather than a tort-based causation test to determine

the scope of personal jurisdiction.

Most of the lower federal courts have acknowledged that

their standards, though differently stated, are similar in

application. The Sixth Circuit has stated that although a

cause of action need not “formally ‘arise from’ defendant’s

contacts with the forum,” there must be a “substantial

connection” with the defendant’s forum activities. Third

National Bank v. WEDGE Group, 882 F.2d 1087, 1091 (6th

Cir. 1989). It has equated its “substantial connection”

requirement with the “lies in the wake of” standard em-

ployed by the Seventh Circuit in Amoco Cadiz, 699 F.2d at

915-16. The Sixth Circuit also has noted that its position is

consistent with the Fourth and Eleventh Circuit standards,

as well as with this Court’s precedents. Third Nat'l Bank,

882 F.2d at 1091 (“The law of this circuit... is consistent

with the Supreme Court’s language in /nternational

Shoe... [and] with [the standard applied] by at least two

other circuits. See City of Virginia Beach v. Roanoke River

Basin Ass'n, 776 F.2d 484, 487 (4th Cir. 1985); Southwire

_Co v. Trans-World Metals & Co., 735 F.2d 440, 442 (11th

Cir. 1984).”’)

The California Supreme Court similarly noted here that

its “substantial connection” standard is consistent with the

standards adopted by most federal circuits. Pet. App.

21a-23a. Moreover, the standard applied by the court below

and the federal courts discussed above comporis with this

Court’s precedents setting forth the values underlying the

Due Process Clause. The “substantial connection” between

defendant’s forum activities and the cause of action, coupled

with the requirement that those activities constitute “mini-

mum contacts” with the forum, ensures that the defendant

will be forewarned that his purposeful availment of the

forum may subject him to suit there.

The only circuit court that clearly remains separate from

the others is the Ninth Circuit, which continues to apply a

tort-based “but for” test rather than the relational standard

suggested by this Court’s decisions and applied by other

federal courts. See Ballard v. Savage, 65 F.3d 1495, 1500

(9th Cir. 1995) (reaffirming the “but for” test of Shute);

Doe v. American Nat'l Red Cross, 1197 U.S. App. LEXIS

9650 (May 2, 1997) at *9 (same).° Given the near-

unanimity with which the other federal courts are reaching

consensus, there is a substantial possibility that the Ninth

Circuit will follow suit. If it does not, then a case from the

Ninth Circuit directly posing the question would be a more

appropriate vehicle for resolving the issue.

> Even the Ninth Circuit has qualified its “but for” standard some-

what by noting that the “reasonableness” element of the due process

analysis may allow a defendant to defeat personal jurisdiction even

where the defendant's activities were purposefully directed at the forum

and were the “but for” cause of the plaintiff's injuries, but where

exercising jurisdiction under the circumstances would be unreasonable.

Doe, 1997 U.S. App. LEXIS 9650 at *10.

2. The Legal Question That Petitioner Poses Is Not At

Issue In This Case

Even if further guidance by this Court were needed to

resolve variations among the “relatedness” standards ap-

plied by the lower courts, this case is a poor vehicle for doing

so because it does not squarely present the issue. As the

California Supreme Court explained here, petitioner’s long-

term franchise agreement with a California corporation is at

the heart of Vons’ counterclaim and was a direct and

immediate cause — even in a strict tort sense — of Vons’

injuries. Petitioner’s franchise agreements with Foodmaker,

a California corporation, required it to prepare and cook

hamburger meat in an unsafe manner, causing injury to Jack

In The Box customers. Petitioner’s extensive contractual

ties with California dictated the very actions that form the

substantive basis for Vons’ claims. These actions — the

inadequate preparation and cooking of hamburger meat —

are both the “proximate” and the “but for” cause of the

injuries caused by petitioner. As a result, California’s asser-

tion of personal jurisdiction in this case simply does not rest

upon this Court’s selection of a “relatedness” standard.

Even if this Court concludes that guidance is needed at

some point to clarify the necessary relationship between the

defendant’s contacts with the forum and the cause of action,

it should await a case that squarely presents the issue.

Specifically, the Court should await one of the many cases

where a sporadic contact with the forum state is a “but for”

cause of an injury in a foreign state, but otherwise bears

little relation to the plaintiffs’ action or the injury itself.

In Shute, for example, the defendant’s forum contacts

consisted merely of advertising in the forum and distributing

brochures to travel agents within the forum. One such travel

agent booked passage on defendant’s cruise ships for Wash-

ington residents. Although the defendant’s contacts were

extensive enough to constitute the “but for” cause of plain-

tiffs injuries aboard defendant’s cruise lines, they were not

the proximate cause of those injuries. As the Ninth Circuit

itself recognized, its application of a “but for” standard,

rather than a “proximate cause” standard, was determina-

tive of that court’s finding of jurisdiction.

This case does not frame the relatedness requirement in

such sharp relief. Accordingly, rather than granting certio-

rari in a case that will not require the Court to reach the

only question that the petitioner has identified as certworthy,

this Court should await a case in which the relatedness

standard determines the forum’s assertion of personal

jurisdiction.

CONCLUSION

In sum, the conflict that petitioner claims exists among

the lower federal courts has largely resolved itself. To the

extent that further clarification is necessary, this Court

should await a case that presents a more appropriate vehicle

for resolving the issue. The petition for a writ of certiorari

should be denied.

Dated: June 26, 1997 Respectfully submitted,