Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D. Mass.: Lack of personal jurisdiction melts Baskin-Robbins’ declaratory judgment action against sub-franchisee, (Sep 28, 2015)

By Michael Menzhuber, J.D., LL.M.

In an action by Baskin-Robbins Franchising, LLC, to declare that its Territorial Franchise Agreement (TFA) with its sub-franchisee expired at the end of its most recent term, the sub-franchisee’s motion to dismiss for lack of personal jurisdiction was granted by the federal district court in Massachusetts. The court determined that the sub-franchisee did not purposefully avail itself of the privilege of conducting activities in Massachusetts (Baskin-Robbins Franchising, LLC v. Alpenrose Dairy, Inc., September 25, 2015, O’Toole, G.).

Background. Pursuant to a TFA executed in California in 1965, Baskin-Robbins authorized Alpenrose Dairy, Inc. (Alpenrose) to recruit retail franchises for the sale of Baskin-Robbins ice cream products within a specified territory and to manufacture, distribute, and sell ice cream products to these franchisees as a wholesaler. The initial territory encompassed the states of Oregon and Washington but was later expanded to include additional territory in Idaho and Maine. Alpenrose’s principal place of business was in Oregon. Baskin-Robbins’ original place of business was in California but, in the 1990’s, it was moved to Massachusetts. Notwithstanding this change in location, Alpenrose continued to send Baskin-Robbins notices of renewal.

The parties renewed the TFA every six years since its execution, until the end of 2013, when Alpenrose notified Baskin-Robbins that it would not renew after the term expiring in December 2014. Baskin-Robbins sought a declaratory judgment against Alpenrose declaring that their TFA expired at the end of its most recent term. Alpenrose moved to dismiss for lack of personal jurisdiction, or, alternatively, to transfer venue.

Lack of personal jurisdiction. The court noted that the exercise of personal jurisdiction over a defendant must be authorized by the Massachusetts long-arm statute. To establish jurisdiction, Baskin-Robbins must show that: (1) its claim arose out of or was related to Alpenrose’s activities in Massachusetts; (2) Alpenrose purposefully availed itself of the privilege of conducting activities in Massachusetts, thereby invoking the benefits and protections of Massachusetts laws and making its involuntary presence before the court foreseeable; and (3) the exercise of jurisdiction in Massachusetts was reasonable.

The court determined that the fact that a non-resident enters into a contract with a Massachusetts resident is not, by itself, sufficient to satisfy the personal jurisdiction requirement and that the manner in which the parties carried out the agreement must be evaluated. There was nothing in the history of the relationship between Alpenrose and Baskin-Robbins suggesting that Alpenrose intended to purposefully avail itself of the privilege of conducting business in Massachusetts. Alpenrose, by renewing its agreement with Baskin-Robbins, was ensuring that it could continue to do business in the territory that it was assigned. The mere knowledge that Baskin-Robbins had relocated to Massachusetts did not subject Alpenrose to the jurisdiction of the court there.

The court also concluded that: (1) Massachusetts did not have a strong interest in adjudicating a dispute involving a contract performed in other states; (2) it would be a significant burden to Alpenrose to defend in Massachusetts; and (3) it was not clear that Baskin-Robbins could not obtain convenient and effective relief elsewhere.

The case is 14-13771-GAO.

Attorneys: David E. Worthen (Gray, Plant, Mooty, Mooty & Bennett, P.A.) for Baskin-Robbins Franchising LLC. Nathan T. Alexander (Dorsey & Whitney LLP) for Alpenrose Dairy, Inc.

Companies: Baskin-Robbins Franchising LLC; Alpenrose Dairy, Inc.

Cases: FranchisingDistribution MassachusettsNews