Lakeside Bridge & Steel Co. v. Mountain State Construction Co., Inc

Background

A Wisconsin steel company contracted to sell large structural parts to a West Virginia construction company for use at a Virginia dam. The parts were made in Wisconsin and shipped from the seller’s Milwaukee plant under a contract saying Wisconsin law would govern. The buyer later refused part of the payment, claiming defects, and the seller sued in Wisconsin to recover the unpaid balance. The case moved to federal court, which entered summary judgment for the Wisconsin seller, but the Seventh Circuit reversed for lack of personal jurisdiction over the out-of-state buyer.

Reasoning

The main question was whether the West Virginia buyer had enough connection to Wisconsin to be sued there over the contract. The Seventh Circuit applied the Court’s prior rules and found the buyer’s contacts were mainly its own unilateral actions: sending a purchase order, communicating by phone and mail, and knowing the goods would be made in Wisconsin. The court held those facts did not show the buyer had “purposefully” reached into Wisconsin enough to permit a suit there, so the seller’s Wisconsin judgment could not stand.

Real world impact

The Supreme Court declined to review the case, so the Seventh Circuit’s decision stands. That outcome affects sellers and buyers who do business across state lines: companies may face more limits on bringing contract suits in the buyer’s home state, and commercial parties will remain unsure because courts are split on this issue. The high court’s denial leaves the legal uncertainty unresolved for now.

Dissents or concurrances

Justice White, joined by Justice Powell, dissented from the denial and would have granted review to resolve the disagreement among courts over jurisdiction in interstate contracts.