District Court Finds Personal Jurisdiction over Icelandic Defendants That Installed Machinery in Minnesota

The World in U.S. Courts: Summer and Fall 2016 - Personal Jurisdiction/Forum Non Conveniens/ Foreign Sovereign Immunity Act (FSIA)

Lei Packaging, LLC v. Emery Silfurtun, Inc., U.S. District Court for the District of Minnesota, August 16, 2016

Plaintiff, Lei Packaging, sued Defendant Emery for breach of contract.  It also asserted related claims against Samey and Hedinn Ltd. (“Icelandic Defendants”).  The Icelandic Defendants moved to dismiss for lack of personal jurisdiction and improper venue.

Minnesota’s personal jurisdiction requirements are the same as those under the Due Process Clause of the U.S. Constitution, under which a defendant must have certain minimum contacts with the forum and that maintenance of the suit not offend traditional notions of fair play and substantial justice.  The governing precedent in the Eighth Circuit uses a five factor test to determine whether minimum contacts exist: (1) the nature and quality of the contacts with the forum state; (2) the quantity of contacts with the forum; (3) the relation of the cause of action to these contacts; (4) the interest of the forum state in providing a forum for its residents; and (5) the convenience of the parties.

Here, defendant Emery entered into a contract (“Machine Agreement”) to provide a manufacturing machine for Lei Packaging.  Emery subsequently contracted with the Icelandic Defendants to assist in carrying out its obligations under the Machine Agreement.  The contract between Emery and the Icelandic Defendants explicitly stated that the work was to be performed for Lei Packaging in Minnesota.  And, the Icelandic Defendants allegedly sent agents to Minnesota, for a significant amount of time, to install and perform maintenance on the machine.  The machine was faulty, so Lei Packaging and Emery executed a modification agreement.  The District Court in Minnesota first concluded that jurisdiction over the Icelandic defendants should be measured with reference to all of their dealings in connection with the contract, not just the modification.

The Court then found that sufficient contacts with Minnesota existed to support the assertion of jurisdiction.  The Icelandic Defendants’ employee visits to Minnesota were made to further their contractual obligation to install the machine at Lei Packaging’s Minnesota facility and directly related to the cause of action, so the Court found that the first three factors of the jurisdictional inquiry were satisfied.  The fourth factor was satisfied because the machine was installed in Minnesota and operated in Minnesota and the representatives for the Icelandic Defendants spent considerable time in Minnesota working on the machine.  Thus, Minnesota had an interest in providing a forum for Lei Packaging to litigate its claims.  The fifth factor was satisfied because Lei Packaging did not have any involvement in bringing the Icelandic Defendants onto the project, nor did any Lei Packaging representative travel to Iceland. Thus, it was more convenient for the Icelandic Defendants to litigate in Minnesota. As such, the Court had personal jurisdiction over the Defendants.

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