623 F.2d 375 (5th Cir. 1980), 78-3774, Gold Kist, Inc. v. Baskin-Robbins Ice Cream Co.

Docket Nº:78-3774.
Citation:623 F.2d 375
Party Name:GOLD KIST INC., Plaintiff-Appellant, v. BASKIN-ROBBINS ICE CREAM COMPANY, Defendant-Appellee.
Case Date:August 07, 1980
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 375

623 F.2d 375 (5th Cir. 1980)

GOLD KIST INC., Plaintiff-Appellant,



No. 78-3774.

United States Court of Appeals, Fifth Circuit

August 7, 1980

Page 376

Alston, Miller & Gaines, James S. Stokes, IV, Anne S. Rampacek, Atlanta, Ga., for plaintiff-appellant.

Kutak, Rock & Huie, Terrence L. Croft, C. Wilson DuBose, John R. Lowery, Atlanta, Ga., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.


CHARLES CLARK, Circuit Judge:

Just having Georgia on my mind is not enough to bring me within reach of the Georgia long-arm statute, argues Baskin-Robbins Ice Cream Company ("Baskin-Robbins"), a licensor of ice cream products. The district court agreed and granted Baskin-Robbins' 12(b)(2) motion to dismiss this claim by Gold Kist Inc., for Baskin-Robbins' alleged failure to accept delivery under its contract of 75,750 pounds of Georgia pecans. We find that Baskin-Robbins' activities in Georgia consisted of more than mere mental processes, that the district court erroneously interpreted the statute, and that the exercise of jurisdiction over Baskin-Robbins does not offend due process. We therefore reverse and remand.


Gold Kist Inc., is a farmers' cooperative association incorporated and existing under the Cooperative Marketing Act of the State of Georgia, with its principal place of business in Atlanta, Georgia. Baskin-Robbins is a Delaware corporation with its principal place of business in Burbank, California. In 1975 Baskin-Robbins was considering using Gold Kist as a supplier of pecans. Norman J. Klipfel, Baskin-Robbins' Vice President of Production Resources, and Tomah Bill Williams, National Production Manager, traveled to Gold Kist's pecan processing plant in Waycross, Georgia, to determine whether that plant met Baskin-Robbins' requirements with regard to sanitation, quality control, and processing methods, and in other respects. Ernie Sharp, a consultant to Baskin-Robbins, and Richard E. Kelm of Sullivan Sales, Inc., a food broker for Gold Kist, accompanied Klipfel and Williams on their inspection visit. Klipfel and Williams inspected the plant in the morning and discussed with Rick Bronaugh, Gold Kist's plant manager, and James M. Smith, Pecan Division Sales Manager, the quantities and sizes of pecans that Gold Kist could supply Baskin-Robbins. They also talked about the changes that Gold Kist would have to make in its plant before Baskin-Robbins would approve Gold Kist as a supplier of pecans. While Klipfel and Williams were at Gold Kist's Waycross plant, Smith agreed on behalf of Gold Kist to make the requested changes.

Sullivan Sales acted as broker for two contracts between Gold Kist and Baskin-Robbins for the purchase of pecan halves and pieces. The first contract was executed in February 1976; the second contract, No. 765 (the one giving rise to this lawsuit), in December 1976. Gold Kist proposed the terms of the contract to Kelm at Sullivan Sales' office in Detroit, Michigan, and Kelm then communicated those terms to Sharpe, who was in Detroit or Evansville, Indiana, during most of the discussions. Sharpe would then convey these terms to Baskin-Robbins in Burbank, California. Smith executed the contract in Gold Kist's Waycross, Georgia, office and forwarded it to Kelm, who delivered it to Baskin-Robbins' office in Burbank.

Under the terms of the contract, Baskin-Robbins agreed to purchase 350,000 pounds of pecan halves and pieces from Gold Kist. In January 1977, Baskin-Robbins called Sullivan Sales and requested that the amount

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purchased under contract No. 765 be reduced from 350,000 pounds to 200,000 pounds. Sullivan Sales called James L. Dendy, Jr., Gold Kist's Pecan Division Manager, at Gold Kist's Georgia office. Dendy agreed to the request and Sullivan Sales communicated that agreement to Baskin-Robbins.

Baskin-Robbins instructed Sullivan Sales to accept orders for pecans covered by contract No. 765 from certain designated companies, one of which was Kinnett Dairies, Inc., in Columbus, Georgia. Kinnett Dairies processes milk and manufactures ice cream, some to Baskin-Robbins' specifications. Kinnett Dairies sells that ice cream to its wholly-owned subsidiary, Colonial Ice Cream Company ("Colonial"), which is the area franchisor for Baskin-Robbins. Colonial has exclusive rights to create Baskin-Robbins franchises in Georgia, Florida, South Carolina, and a portion of Alabama. The parties stipulated that there are forty "Baskin-Robbins 31 Ice Cream Stores" in the State of Georgia. These retail stores are not owned by Baskin-Robbins but are independent franchises granted by Colonial, although Baskin-Robbins does supply the forms for and approves each individual franchise agreement, provides merchandising and technical assistance, and prescribes strict rules and regulations for the specific operation of the individual retail franchises as well as for the conduct of the area franchisor's business.

Baskin-Robbins does not directly receive any revenue from the retail sales of ice cream. Rather, it receives a designated amount of money for each gallon of ice cream that Colonial sells to any of its franchisees. All of that ice cream, regardless of where consumed, is manufactured by Kinnett Dairies at its plant in Columbus, Georgia. Colonial, based in Columbus, has offices in Atlanta, Georgia, and Fort Lauderdale, Florida. The record does not reveal the share of Colonial's sales made by each office or the proportion of total sales in each state in its region. The parties stipulated, however, that Baskin-Robbins received "a substantial amount of money" based on sales by Colonial to franchisees within the State of Georgia.

After Gold Kist shipped a total of 124,250 pounds of pecans from its Waycross plant under the terms of contract No. 765, including ten shipments to Kinnett Dairies, Baskin-Robbins refused to accept delivery of the remaining 75,750 pounds. Gold Kist then sued Baskin-Robbins in the Northern District of Georgia for breach of contract. Baskin-Robbins moved to dismiss under Rule 12(b)(2) for lack of personal jurisdiction, asserting that it had transacted insufficient business in Georgia to permit the exercise of jurisdiction over it under the Georgia Long-Arm Statute, Ga.Code Ann. § 24-113.1(a) (1971). The district court granted the motion and Gold Kist appealed.


In a diversity action, a federal court may assert jurisdiction over a nonresident defendant only to the extent permitted by the long-arm statute of the forum. Washington v. Norton Manufacturing, Inc., 588 F.2d 441, 444 (5th Cir.), cert. denied, 442 U.S. 942, 99 S.Ct. 2886, 61 L.Ed.2d 313 (1979); Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 489 (5th Cir. 1974); Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir. 1963). Of course, regardless of the breadth of the state statute, the exercise of jurisdiction over a defendant must comport with the basic requirements of the due process clause of the fourteenth amendment. We first examine whether the Georgia long-arm act supports the exercise of jurisdiction over Baskin-Robbins. If it does, we must then determine whether such an assertion of jurisdiction is consistent with due process.

A. The Georgia Long-Arm Act

The Georgia Long-Arm Act, Ga.Code Ann. § 24-113.1, provides in pertinent part:

A court of this...

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