New Venture Holdings LLC v. Verdi

The plaintiff’s contract suit against its advertising company must be dismissed for lack of personal jurisdiction.

The defendant, a New York ad agency, had been soliciting the plaintiff’s business for several years before the parties reached an agreement. The plaintiff put a negotiated agreement on its letterhead and sent it to the defendant in New York City, where the defendant executed it.

The parties’ contract doesn’t itself create a sufficient connection between the defendant and Virginia to justify the exercise of specific personal jurisdiction. The parties reached an oral agreement in Illinois, and the written contract was executed in New York. Virginia’s choice-of-law provisions say that either Illinois or New York law would govern questions about the nature, validity, and interpretation of the contract, rather than Virginia law. Thus, the Defendant didn’t avail itself of Virginia law.

The defendant’s various communications via phone and email – soliciting the plaintiff’s business and negotiating the terms of the contract – do not constitute sufficient minimum contacts. While the plaintiff had to approve the advertisements, book travel, pay the defendant its monthly fee, and accept ownership of work product – all from its headquarters in Virginia, the plaintiff cannot be the only link between the defendant and the forum. Rather, the defendant’s conduct must form the necessary connection with the forum State that is the basis for its jurisdiction over him. It’s also not evident from the contract that the parties contemplated activity in Virginia. And the defendant hasn’t engaged in any physical contacts with Virginia.

Because nothing about the performance of the contract on the facts and allegations before the Court created a link betweenDefendant and Virginia, it is also an insufficient basis alone forpersonal jurisdiction.

Finally, viewing all of the defendant’s contacts cumulatively here also isn’t a basis for specific personal jurisdiction in this case. The defendant’s contacts with Virginia are limited to the solicitation of the plaintiff’s business prior to the contract and communications following the contract. The plaintiff hasn’t demonstrated that the defendant availed itself of the privilege of conducting activities in Virginia. It also can’t be said that any unfairness results to the plaintiff, which clearly availed itself of foreign states’ laws. The plaintiff is a sophisticated corporation and can afford to bring a lawsuit in another state.

To hold that this situation is sufficient for personal jurisdiction over the defendant suggests would subject professional service firms to suits in a state merely because their clients do business there. The court isn’t aware of any case that has permitted such an expansive view of personal jurisdiction.

Motion to dismiss granted.

New Venture Holdings LLC v. Verdi, No. 2:18cv370, Mar. 21, 2019. EDVA at Norfolk (Davis).

Categories: Opinions, U.S. District Court - Eastern District of Virginia

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