Tuesday, July 01, 2008, 8:33 AM

COA Splits On Personal Jurisdiction

Today in Rossetto USA, Inc. v. Greensky Financial, LLC, the Court of Appeals (COA) held that personal jurisdiction was lacking over one Georgia-based defendant but not over another. Judge Arrowood authored the majority decision, joined by Judge McCullough. Judge Tyson dissented on both of the majority's personal-jurisdiction rulings: where the majority said "yes," Judge Tyson said "no"; and where the majority said "no", Judge Tyson said "yes."

The NC-based plaintiff sells and distributes furniture. It sold furniture to a GA-based company, Eclecticglobal, over a period of years. The first issue was whether NC had personal jurisdiction over a foreign financing company, Greensky, that financed Eclecticglobal's purchases from plaintiff. The majority held that NC could exercise personal jurisdiction over the foreign financing company (which also was based in GA) because: (1) that company made frequent payments to the NC-based plaintiff on behalf of Eclecticglobal, either by mailing checks to plaintiff's office in NC or by wiring payments to plaintiff's account in NC; (2) plaintiff received at its NC office numerous communications and phone calls from the financing company; and (3) the financing company at one point attempted to sell plaintiff's furniture (presumably not in NC, however). Judge Tyson dissented, citing cases for the proposition that the mere mailing of payments or correspondence to NC isn't enough to give rise to personal jurisdiction under the "purposeful availment" (due process) test.

The court next confronted whether NC has personal jurisdiction over a second defendant: Furniture Retailers, a GA-based company alleged to have assumed control of or taken over the operations of Eclecticglobal, plaintiff's customer. The complaint alleged that plaintiff learned of this takeover or assumption of control from the financing company. The complaint alleged that Furniture Retailers received a shipment of furniture from plaintiff, and that an employee of Furniture Retailers called plaintiff to ask questions about the furniture. The COA majority held that this evidence merely established that Furniture Retailers was a passive recipient of furniture that plaintiff intended for Eclecticglobal, and that this was insufficient to establish minimum contacts with NC. Again, Judge Tyson dissented. He concluded that, once Furniture Retailers assumed control of or took over Eclecticglobal's operations and accepted delivery of furniture shipped/invoiced to it from NC, it could reasonably anticipate being haled into court in NC.

The Supreme Court likely will now have to sort this all out given Judge Tyson's dissent.

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