§ 2.01  Personal Jurisdiction Based on Citizenship, Consent and Waiver

 

[1] Suit in the Defendant’s Home State

 

A defendant is subject to the personal jurisdiction of his/her/its home state.   “Home state” may be defined:

 

            (1) for individuals by residence, citizenship and domicile.  In Milliken v. Meyer, 311 U.S 457 (1940), the Supreme Court upheld the validity of personal jurisdiction based on domicile even though the defendant was absent from the state at the time.

 

(2) for corporations by the state of incorporation or where the corporation conducts its principal operations.

 

[2] Consent

 

A defendant may consent to the court’s personal jurisdiction in advance of suit, and such consent, if expressly made, functions to cure any jurisdictional defects that might otherwise exist.  Examples of express consent include:

 

(1) forum-selection clauses in contracts [see Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585 (1991), in which the Court upheld a clause printed on the back of the plaintiff’s steamship ticket]; and

 

(2) consent documents filed by foreign corporations with state authorities as a condition for doing business in the forum.

 

[3] Waiver

 

When a nonresident defendant objects to a state’s personal jurisdiction over him/her on due process grounds, he/she must preserve such objection or risk waiving it.  Waiver need not be express. It is enough that a party act in a way which is incompatible with the party’s argument that the forum lacks a basis for asserting personal jurisdiction over him/her.

 

Defendant will waive his/her challenge to personal jurisdiction if he/she either fails to include it in a motion to dismiss made on other grounds, or fails to otherwise raise the matter by motion or pleading.

 

Today, most states, as well as the federal system, no longer require a defendant to make a special appearance for the purpose of contesting jurisdiction, separate and apart from any other grounds on the merits of the case.  Defendant does not prejudice his/her motion to dismiss by joining with it other grounds for dismissal.

 

§ 2.02 When Parties Cannot be Served Within the Forum State

 

In the seminal case of Pennoyer v. Neff, 95 U.S. 714 (1877), the Supreme Court held that due process prevented suit against nonresident defendants who could only be found and served elsewhere.

 

Pennoyer involved a default judgment entered by an Oregon state court against Neff for attorney’s fees.  Neff was neither a citizen of Oregon nor had he been served there, although he did own property in the state. Neff’s Oregon property was seized and sold by the sheriff to Pennoyer in order to satisfy the judgment.  Subsequently, Neff sued Pennoyer in federal court for recovery of his property. 

 

Concluding that Oregon could not exercise personal jurisdiction over Neff in an action to determine personal liability, the Court invalidated the default judgment and resulting sheriff’s sale. The Court held that if a state court attempts to exercise personal jurisdiction over a defendant, the defendant “must be brought within its jurisdiction by service of process within the State, or his voluntary appearance.”

 

 

§ 2.03 Minimum Contacts with Forum State

 

[1] International Shoe

 

In International Shoe Co. v. Washington, 326 U.S. 310 (1945), the Supreme Court articulated a new test of determining whether personal jurisdiction exists over a nonresident defendant who cannot be found and served within the forum state:  whether the defendant has certain minimum contacts with the forum state, such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ”

 

The facts of International Shoe are as follows:  International Shoe Company was incorporated in Delaware and had its principal place of business in Missouri. The company employed Washington residents to solicit orders there, who reported directly to the company’s main office in Missouri.  The state of Washington sued International Shoe to collect unemployment compensation tax upon salaries defendant had paid to its Washington employees, and International Shoe challenged personal jurisdiction in Washington.  The Supreme Court affirmed Washington’s exercise of personal jurisdiction over International Shoe, finding sufficient contacts with the state to do so. 

 

International Shoe identified two types of contacts a nonresident defendant could have with the forum:

(1) those related to the controversy (specific jurisdiction); and

(2) those unrelated to the controversy that are of such a nature as to justify suit against defendant in the current controversy (general jurisdiction).

 

 

[2] Contacts Related to the Controversy

 

[a] Single or Isolated Activities

 

In International Shoe, the Supreme Court noted that a corporation’s “single or isolated items of activities in a state . . . are not enough to subject it to suit on causes of action unconnected with the activities there”; in McGee v. International Life Ins. Co., 355 U.S. 220 (1957), the Court addressed the issue of whether a “single or isolated activities” related to the controversy could support personal jurisdiction.  The Court answered in the affirmative.

 

McGee, as the beneficiary of her deceased son’s life insurance policy, sued defendant International Life in California.  Defendant was served by mail in Texas, its corporate home.  International Life declined to appear in the case and plaintiff obtained a default judgment in California, which she attempted to enforce in Texas.  International Life collaterally attacked the judgment, arguing that California did not have personal jurisdiction.

 

Despite the fact that the defendant conducted virtually no business in California, with the only California policy in force being the decedent’s, the Court nonetheless held that California had validly exercised jurisdiction over the defendant.  The Court emphasized the fact that the contract sued upon had a substantial connection to the forum state, as well as California’s strong interest in protecting its citizens.

 

 

[b] Sufficient Related Contacts Found

 

Burger King Corp. v. Rudzewicz [471 U.S. 462 (1985)] demonstrated that not all of the defendant’s contacts related to the controversy must be within the forum.  Through negotiation with Burger King’s regional office in Michigan, Rudzewicz and another Michigan defendant obtained a franchise in that state.  Defendants failed to make payments, and Burger King brought a federal diversity suit on the franchise agreement in Florida, its headquarters and place of incorporation.

 

The Supreme Court concluded that personal jurisdiction over Rudzewicz was constitutional, finding that there were enough Florida contacts related to the controversy to satisfy the test. Defendants at times dealt directly with Burger King’s Miami headquarters; they contracted with Burger King to have Florida law govern the franchise agreement; and they promised to send their franchise payments to Burger King’s Florida address. Under the circumstances, the Court refused to attach importance to the fact that Rudzewicz had not been in the forum state.

 

[c] Insufficient Related Contacts Found

 

In World-Wide Volkswagen v. Woodson, 444 U.S. 286, 297 (1980), the Court further refined the minimum contacts test, stating that “critical to due process analysis . . . is that the defendant’s conduct and connection with the forum State as such that he should reasonably anticipate being haled into court there.” 

 

In this case, the plaintiffs purchased an Audi from defendant retailer Seaway Volkswagen in New York.  Thereafter, while traveling across country in the automobile, they were involved in a collision in Oklahoma, and the gas tank ignited, seriously injuring the plaintiffs.  Plaintiffs brought suit in an Oklahoma state court against manufacturer Audi, importer Volkswagen of America, World-Wide Volkswagen and Seaway.

 

Noting that the only connection of the defendants with Oklahoma was that an automobile sold in New York to New York residents became involved in an accident in Oklahoma, the Court held that Oklahoma courts were without minimum contacts necessary to assert personal jurisdiction.  Defendants did not sell cars, advertise, or carry on any other activity in the state.  Thus, the Court reasoned that the conduct of the retailer and wholesaler was not such as to cause them to anticipate being sued in Oklahoma.

 

            [3] Contacts Unrelated to the Controversy

 

When a non-resident defendant cannot be found and served within the forum, and when the cause of action arises outside of the forum, exercise of personal jurisdiction over the defendant requires contacts with the forum state that are “systematic and continuous.”  [Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952)].  Such standard was met in Perkins, an action arising out of out-of-state activities, where the defendant maintained an office and conducted business in the forum state.  However, in Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984), the mere fact that the nonresident defendant made regular purchases in the forum state was not held sufficient to justify personal jurisdiction in a case not related to such purchases.

 

[4] Combining Related and Unrelated Forum Contacts

 

Keeton v. Hustler Magazine, 465 U.S. 770 (1984), presented the situation where a nonresident defendant has contacts with the forum state that are both related and unrelated to the controversy.  Keeton sued Hustler Magazine in federal court in New Hampshire for libel.  Hustler Magazine had circulated in New Hampshire copies of the magazine alleged to have libeled plaintiff (related contacts), and it had circulated other issues there in a continuous and systematic fashion (unrelated contacts).

 

While there is some question whether either defendant’s related or unrelated contacts would have alone been sufficient to support personal jurisdiction, the Court found that the aggregate of defendant’s contacts with the forum were proved sufficient.

 

            [5] “Notions of Fair Play and Substantial Justice”

 

In Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), the Court interpreted the standard from International Shoe that “maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ”

 

The plaintiff sued in California over a serious accident there, allegedly caused by failure of the rear tire of plaintiff’s motorcycle.  The plaintiff sued the Taiwanese tire manufacturer, which to bring Asahi, a Japanese concern and manufacturer of the tire’s valve assembly, into the case on a theory of indemnification.

 

The Court held that California’s attempt to assert personal jurisdiction over the foreign defendant was unreasonable on balance.  The Court found the interests of the plaintiff and the forum state to be “slight,” and Asahi’s burden from defending in California “severe.”

 

 

§ 2.04  State Long-Arm Statutes

 

In response to International Shoe and its progeny, most states have enacted long-arm statutes, authorizing out-of-state service on defendants who otherwise could not be served. Long-arm statutes vary greatly from state to state, but there are three basic types:

 

(1) conferring jurisdiction to the full extent permitted by the Fourteenth Amendment right to due process (sometimes called “blanket” or “limits of due process”);

 

(2) listing specific instances under which the state can exercise jurisdiction (sometimes called “enumerated” or “laundry list”); and

 

(3) an intermediate type listing specific instances but authorizing court discretion in interpreting the instances.

 

 

§ 2.05  Transient Jurisdiction

 

Transient jurisdiction is based on service within the forum of a nonresident defendant passing through the state, and has been upheld by the Supreme Court in Burnham v. Superior Court, 495 U.S. 604 (1990).

 

 

§ 2.06  Quasi In Rem Jurisdiction

 

            [1] General Rule

 

Quasi in rem jurisdiction is another method for exercising jurisdiction over a defendant, albeit in a limited manner, based on the defendant’s property located within the forum.  Quasi in rem jurisdiction can be used to adjudicate personal obligations, not merely rights in the res.  However, it binds the defendant only with respect to his interest in the res upon which jurisdiction is based, and thus, the value of a quasi in rem judgment cannot exceed the value of the res.

 

[2] Extension of Minimum Contacts Test to Quasi in Rem Jurisdiction

 

Quasi in rem jurisdiction has essentially become obsolete as a result of the Supreme Court’s decision in Shaffer v. Heitner, 433 U.S. 186 (1977), in which it extended the minimum contacts test to quasi in rem cases.

 

In Shaffer, the plaintiff brought a shareholder derivative suit against officers and directors of the Greyhound Corp., a Delaware corporation, and its subsidiary, Greyhound, Inc.  The defendants neither resided in Delaware nor were served there, and the alleged wrongful acts occurred outside Delaware.  However, plaintiff asserted quasi in rem jurisdiction over the defendants, each of whom held stock in Greyhound, relying on a Delaware statute which conferred quasi in rem jurisdiction over stock issued by corporations chartered there.  The Court found such grounds insufficient and stated that all assertions of state court jurisdiction must be based on “minimum contacts.” The test was not satisfied here where the defendant’s in-state property was “completely unrelated to the plaintiff’s cause of action.  Significantly, the Court held that “the presence of the property alone would not support the State’s jurisdiction.”

 

In another quasi in rem case arising out of an automobile accident [Rush v. Savchuk, 444 U.S. 320 (1980)], the Court struck down the Seider doctrine which provided that service within the forum on a nonresident driver’s insurer conferred quasi in rem jurisdiction, with the res being the insurer’s duty to defend and indemnify the nonresident defendant.  Exercise of jurisdiction over the defendant here was found to be was improper, as he had no other contacts with the forum state.

 

 

§ 2.07  In Rem Jurisdiction

 

Distinct from personal and quasi in rem jurisdiction – both of which support claims against a defendant for personal obligations – in rem jurisdiction focuses on property within the forum and can only be used to adjudicate claims regarding such property.  In rem jurisdiction may also attach to “status” such as marital status in a divorce action.

 

 

§ 2.08 Jurisdictional Challenges

 

A defendant may challenge the court’s personal jurisdiction in two ways: 

 

[1] Direct Attack

 

A direct attack involves the defendant’s participation in the lawsuit in order to attempt to prevent the court from reaching the merits of the case.  The jurisdictional challenge may be joined with other arguments in support of dismissal.  However, direct attack forces the defendant to forfeit part of the protection secured by due process as he experiences the increased burden of defending in a distant and inconvenient forum as soon as he begins participating in the case.

 

[2] Collateral Attack

 

A defendant who objects to a court’s personal jurisdiction over him/her and defaults in an action may subsequently bring a collateral attack against the judgment.  However, if the defendant participated in the case without objecting to the court’s personal jurisdiction, he/she cures any defect by waiver.  If the defendant did challenge the court’s personal jurisdiction in the first case, he/she is precluded from relitigating the question in the judgment-enforcement proceeding.