• October 21, 2016

Arrowsmith's_map_of_the_world_(1812)Personal jurisdiction jurisprudence in the 21st century is something of a pet peeve of mine (most recent post here (linking to still more posts)). To decide whether they can impose jurisdiction over a party, courts analyze whether the party could “reasonably foresee” being “haled” into a court within the jurisdiction. My most recent post on the subject applauds a move in the right direction by the U.S. Court of Appeals for the Eighth Circuit. That is, I believe the rule should be:

When a foreign company knowingly engages in business with, say, a Minnesota company (knowing it is engaging with the company and knowing the company is in Minnesota), for any protracted period of time (a vague term that might not be determinable with precision by courts ever), in the absence of a contractual exclusive forum selection clause identifying a non-Minnesota forum, the foreign company should be charged with knowledge that, if a dispute ever arises with the Minnesota company over their business interactions, the foreign company might have to defend a lawsuit in Minnesota.

Doesn’t that make sense to you?

In contrast, the recent linked decision makes no sense to me.

Plaintiff Michael Schaefer runs a Minnesota limited liability company that previously provided financial services to the Archdiocese of St. Paul and Minneapolis. He also worked with related California entities, including the Roman Catholic Diocese of Orange. He entered into contracts with the Diocese of Orange and its related entities. His agreements with the California entities included “choice of law clauses” providing that the contracts would be governed by and interpreted pursuant to Minnesota law.

Can it be that one party contracting with another can enter into agreements that Forum Law should apply and, at the same time, NOT reasonably foresee being “haled into court” in the Forum, especially when the agreements are otherwise silent on where disputes are to be adjudicated???

In December 2013, an employee of the Diocese of Orange made a complaint about Schaefer. While investigating the complaint, the Diocese of Orange contacted defendants Archdiocese of St. Paul and Minneapolis and CFC, which reported that Schaefer had engaged in sexual misconduct while employed there, although Schaefer contends that neither this allegation nor the allegation by the employee in California was true. Based on their investigation, appellants terminated all contracts and agreements that its employees, affiliates, or associated entities had with the LLC, rescinded all personal references and recommendations that had been provided for Schaefer, and refused to provide further personal references and recommendations.

In response, Schaefer denied the allegations of wrong-doing and sued the Diocese of Orange and others in Minnesota. The Minnesota Court of Appeals held this week that the court did not have personal jurisdiction over the Orange, California entities.

Scarecrow Wizard of Oz PointingHonestly, it boggles my mind that a court could rule that someone could knowingly enter into several contracts with a Minnesotan that include clauses providing that Minnesota law applies in interpreting the contracts yet not, consistent with the U.S. Constitution, be sued in Minnesota.

Perhaps there is more to this story than meets the eye? It is curious that Mr. Schaefer’s lawyers did not submit the contracts with Minnesota choice-of-law clauses with their motion. In a controversy of this sort, one would assume those contracts would be Exhibit A.  Is there something that they wish to keep out of the court record?


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