Litigation

District Court Dismisses Declaratory Relief, Contract Claim for Lack of Personal Jurisdiction

By Morris James LLP

Solae, LLC v. Hershey Canada Inc., 2008 WL 2011914 (D. Del. May 9, 2008)

Solae LLC (“Solae”), a Delaware LLC with a principal place of business in Missouri, brought a declaratory relief and breach of contract action in Delaware District Court against Hershey Canada, Inc. (“Hershey Canada”), a Canadian corporation with its principal place of business in Ontario. The claims arose out of a contract for Solea’s provision of soy lecithin to Hershey Canada’s Ontario facility. A shipment of the product contained salmonella, prompting a recall of Hershey Canada’s product in Canada and a Canadian government investigation. Hershey Canada informed Solae that it was liable for any ensuing damages from the recall and investigation, and also refused to accept or pay for additional deliveries of the product under the contract. Solae thereafter initiated this declaratory relief and breach action, and Hershey Canada sought dismissal, among other things, on lack of personal jurisdiction grounds. 

Solea argued that the relevant contract, embodied in the “Conditions of Sale” that accompanied the tainted shipment, selected Delaware as the exclusive forum for disputes under it, thus foreclosing a personal jurisdiction defense. Hershey Canada argued that the relevant contract was a “Quantity Contract” between the parties that was not reduced to writing, as permitted under the governing United Nations Convention for the international sale of goods, and did not address the appropriate forum for disputes. The Court found that the Quantity Contract was the relevant contract, and it did not provide for forum. Solae’s argument that the Quantity Contract was modified by the Conditions of Sale that accompanied each shipment was rejected. Having found that there was no forum selection clause that obviated the need to examine whether personal jurisdiction existed, the Court analyzed whether jurisdiction satisfied the Delaware long-arm statute. The Court noted that the only contact with Delaware that Solae pointed to was a 1998 UCC financing statement listing Delaware assets. The Court found this was not sufficient to satisfy either the specific jurisdiction or general jurisdiction provisions of the long-arm statute. The court therefore declined to analyze whether the Constitutional due process considerations for jurisdiction were met. The court also declined to grant Solae jurisdictional discovery, concluding that it had not adduced competent evidence that Hershey Canada was potentially subject to Delaware jurisdiction. The Court therefore dismissed the action for lack of personal jurisdiction. 

Full post as published by Delaware Business Litigation Report on May 16, 2008 (boomark / email).