Appeals Court Clarifies the Reach of Wisconsin’s Long-Arm Statute

By Joe Forward, Legal Writer, State Bar of Wisconsin

Sept. 11, 2012 – A state appeals court recently clarified the reach of Wisconsin's long-arm statute in a breach of contract case against an out-of-state defendant who never physically entered the state in his dealings with a Wisconsin business.

Illinois (and later Arizona) resident James Sarver, doing business as National Print Service, contacted Eau Claire-based Johnson Litho Graphics in 2000 about commercial printing services. The parties commenced a six-year business relationship conducted via telephone, email, or fax.

In 2006, Sarver placed an order on behalf of a New York customer, which accepted the goods without complaint. Sarver failed to pay the balance on the transaction, $47,923.

Johnson Litho filed suit in Eau Claire County Circuit Court to collect the balance. In response, Sarver argued that the Wisconsin court lacked personal jurisdiction over him. The circuit court agreed with Sarver, concluding that the exercise of personal jurisdiction would violate his due process rights under the Fourteenth Amendment to the U.S. Constitution.

But in Johnson Litho Graphics of Eau Claire Ltd. v. Sarver, 2010AP1441 (Sept. 6, 2012), the District III Court of Appeals reversed, concluding that Wisconsin does have personal jurisdiction.

Under Wisconsin’s long-arm statute, Wis. Stat. section 801.05, Wisconsin courts have personal jurisdiction over defendants in actions relating to goods shipped from Wisconsin by the plaintiff “to the defendant on the defendant's order or direction.”

Sarver argued that Eau Clare County Circuit Court did not have personal jurisdiction because Sarver ordered the goods delivered to his New York Customer, a third party, not himself.

The appeals court disagreed.

“We see no principled difference under the long-arm statute between nonresidents who direct Wisconsin companies to ship goods directly to them and nonresidents who instead direct Wisconsin companies to ship goods to third parties,” wrote Judge Paul Higginbotham.

The court also rejected Sarver’s argument that exercising personal jurisdiction would violate his due process rights. Personal jurisdiction violates due process rights unless the defendant purposely established “minimum contacts” with the forum state and the contacts “comport with notions of fair play and substantial justice, in light of relevant factors.”

The circuit court found that Sarver did not establish minimum contacts with Wisconsin because his contacts were limited to placing purchase orders by phone, email, or fax. But the appeals court concluded that these contacts were enough to establish personal jurisdiction.

“A nonresident defendant’s communications with a forum plaintiff via telephone, email and facsimile may comport with due process principles, even when the defendant has not entered the state physically,” Judge Higginbotham explained for the three-judge panel.

Sarver also argued that exercising personal jurisdiction would offend notions of fair play and substantial justice based on the consideration of five factors, including Wisconsin’s interest in adjudicating the dispute, Johnson Litho’s interest in obtaining convenient relief, Sarver’s burden of defending the suit in Wisconsin, and the interstate judicial system’s interest in efficiency.

“In this case, Sarver has failed to meet his burden of presenting ‘a compelling case’ that the exercise of personal jurisdiction offends traditional notions of fair play and substantial justice,” Judge Higginbotham wrote, noting that evidence and witnesses are primarily located here.