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The Franchise Memorandum

Court Denies Defendants’ Motion to Dismiss for Lack of Personal Jurisdiction

A federal district court in Massachusetts has denied a motion to dismiss for lack of personal jurisdiction jointly filed by Marriott International, Inc. and franchisee Reluxicorp in a premises liability action brought against them, finding that a franchise agreement between Marriott’s affiliate and Reluxicorp created sufficient contacts with the forum to satisfy specific jurisdiction requirements. Nandjou v. Marriott Int’l, Inc., 2019 WL 1903382 (D. Mass. Apr. 29, 2019). The plaintiff, Chimene Mbague Nandjou, filed wrongful death, vicarious liability, and negligent infliction of emotional distress claims against Marriott and Reluxicorp following the deaths of her husband and son at a swimming pool located at a franchised Residence Inn by Marriott hotel in Montreal owned and operated by Reluxicorp. Nandjou was a resident of Massachusetts and allegedly received Marriott marketing materials at her home, which she claimed influenced her family’s decision to visit the hotel. Marriott is a Delaware corporation with its principal place of business in Maryland, and Reluxicorp is a Canadian corporation with its principal place of business in Montreal. The defendants moved to dismiss, arguing that the Massachusetts court lacked personal jurisdiction over them because the claims did not arise from actions taken in the state.

The court first determined that Marriott’s alleged actions could be attributed to Reluxicorp for purposes of the jurisdictional analysis on the grounds that the franchise agreement between Marriott’s affiliate and Reluxicorp created a principal-agent relationship that authorized certain contacts with Massachusetts, including the marketing of Reluxicorp’s hotel in exchange for annual fees. Next, given that neither defendant was located or incorporated in Massachusetts, the court considered whether it could exercise specific jurisdiction over them. According to the court, because the alleged advertising at issue was sent via direct mail to Nandjou’s residence in Massachusetts, and was the first step in a series of events that led to Nandjou’s injury, Nandjou’s claims directly arose out of or related to the defendants’ forum-state activities. Further, because the alleged advertisements were part of Marriott’s ongoing marketing efforts, the court found that it was foreseeable that the defendants could be haled into court in Massachusetts, satisfying the purposeful availment requirement. Finally, the court held that exercising jurisdiction over the defendants would be reasonable, taking into consideration the potential burden on them, the forum state’s interest in adjudicating the dispute, and the plaintiff’s interest in obtaining convenient and effective relief. As a result, the defendants’ motion to dismiss for lack of personal jurisdiction was denied, and the court also declined to dismiss Nandjou’s complaint on the grounds of forum non conveniens. The defendants have since filed a motion requesting that the court reconsider its decision.

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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